Trump Tax Season: 10 Major Tax Changes to Expect When Filing This Year
Key Points
It's officially tax season, and many expect tax refunds to be larger this year, given all of the new changes passed in the One Big Beautiful Bill Act last year.
The standard and state and local tax deductions have increased.
There are many other changes people should be aware of before filing their 2025 returns.
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The overarching goal of President Donald Trump's One Big Beautiful Bill (OBBB), which Congress passed last year, was to make the 2016 tax cuts permanent and to enact additional tax benefits. Consumers will get the first taste of these changes as they file their 2025 tax returns from now until April 15.
Treasury Secretary Scott Bessent, who is also the acting commissioner of the Internal Revenue Service (IRS), recently announced that the average tax refund is up 22% from last year thus far. Here are 10 major tax changes consumers should be aware of as they file their returns.
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Official White House photo by Joyce N. Boghosian.
1. The standard deduction is increasing
The standard deduction is the amount one can lower their taxable income if they don't want to itemize deductions, a process that is typically much more complex. The standard deduction increases each year based on inflation and depends on one's filing status. For 2025, the standard deduction increases by $750 to $15,750 for single filers and by $500 to $31,500 for joint filers.
2. SALT deduction limit quadruples
One of the larger tax provisions in OBBB was the state and local tax deduction (SALT), which will increase from $10,000 to $40,000. However, the increase is only temporary. The SALT deduction limit will increase by 1% through 2029 and then revert to 10% in 2030. SALT is typically used to deduct certain state and local taxes, such as property, sales, and income taxes.
For earners with a modified adjusted gross income (MAGI) above $500,000, or $250,000 for a married filer filing separately, the SALT deduction phases down by 30%. Once a person's MAGI reaches $600,000, the SALT deduction reverts to 10%.
3. A backdoor deduction to offset Social Security taxes
Between 2025 and 2028, people who are age 65 and older will receive an additional "bonus" deduction of $6,000, or $12,000 for married couples who don't itemize their deductions. And this can actually be added to the current senior deduction of $2,000, or $1,600 for married couples filing separately, bringing the total senior deduction to $7,600 or $8,000 per individual.
To be clear, this deduction is available to all people age 65 or older. But the White House's intent was to use it to remove Social Security taxes for most people, without actually changing Social Security laws, which are more complex to change.
4. Higher child tax credit
The maximum child tax credit will permanently rise from $200 per child to $2,200. The refundable portion, which allows taxpayers to receive a refund even if they have no taxable income, remains at $1,700 with inflation adjustments for 2025.
5. Higher estate and gift tax exemption
The estate and gift tax exemption will rise by roughly $1 million to $15 million for single filers and $30 million for married joint filers in 2026. This exemption is the amount of assets one person can transfer during their lifetime without paying estate or gift taxes.
6-8. Deductions on tips, overtime pay, and auto loan interest
All of these are temporary exemptions that apply from 2025 to 2028. Prior to these changes, consumers could not deduct taxes for tips, overtime wages, or auto loan interest. Now, they will be able to deduct up to $25,000 per year for tips, $12,500 in overtime pay, and $10,000 in annual interest on new car loans.
9. Trump account credits
Between 2025 and 2028, the government will award a one-time $1,000 credit per newborn child to parents who open "Trump accounts." These are intended to help children start saving for their retirement as early as possible. The accounts will be invested in mutual funds and exchange-traded funds that primarily hold U.S. equities. Parents can also make tax-advantaged annual contributions of up to $5,000. Children will gain access to these accounts at age 18.
10. Non-itemized charitable deductions
For the first time since 2021, tax filers who don't itemize deductions will be able to deduct charitable donations of up to $1,000 for single filers and $2,000 for married joint filers. This new deduction will be permanent after 2025.
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