Big 2025 tax changes that could lower your bill
Savannah Behrends
Copywriter and features editor | January 30, 2026
Don’t leave money on the table this tax season. Metropolitan Community College Accounting Program Director Victoria R. Badura, a certified public accountant, shared the three biggest tax changes that could save you money. Approved in July 2025 as part of the “One Big Beautiful Bill Act,” these changes will be in effect through at least 2028.
1) New “No Tax On...” deductions
Did you receive tips, work overtime or buy a new car via loan in 2025? Good news! Badura said those amounts can be deducted from your taxable income without itemizing.
Here are the details:
- Tips: You may deduct up to $25,000 in tip income
- Overtime: You can deduct up to $12,500 in overtime pay ($25,000 if married filing jointly)
- New car loan interest: Some taxpayers may be eligible to deduct up to $10,000 in interest paid on a qualifying new car loan.
These deductions start phasing out once income exceeds $150,000 (or $300,000 for joint filers).
2) Standard deductions increased with a bonus for those 65+
Badura said everyone should double-check whether the standard deduction benefits them more than itemizing. Due to inflation and the passage of the “One Big Beautiful Bill Act,” deduction amounts increased 7.9% from 2024 to 2025.
2025 standard deduction amounts:
- $31,500 — Married filing jointly
- $23,625 — Head of household
- $15,750 — Single or married filing separately
If you’re over age 65, you could qualify for an additional $6,000 (phases out starting at $75,000 for single or $150,000 for joint).
3) Child Tax Credits updated
For families, Badura noted that the Child Tax Credit is now $2,200 per qualifying child with up to $1,700 in Additional Tax Credit depending on your income.
This column is for general information only and isn’t tax, legal, or financial advice. Tax rules vary by individual circumstances, so consult IRS resources or a qualified tax professional for guidance specific to you.