Starting in 2025, seniors (age 65+) can claim an extra $6,000 standard deduction due to a provision in the Working Families Tax Cut Act.
This enhanced deduction is temporary, applying only to tax years 2025 through 2028. It also begins to phase out once your adjusted gross income (AGI) exceeds $75,000 for single filers or head of household filers and $150,000 for married couples filing jointly.
For example, if you are an eligible single filer over age 65 (and not blind) in 2025, you could combine all three standard deductions, for a total of $23,750.
Here’s the math:
$15,750 (single standard deduction) + $2,000 (65+ additional deduction) + $6,000 (temporary extra senior deduction) = $23,750
Next, let’s walk through the highlights of the Working Families Tax Cut Act and how its many tax provisions might impact your taxes this year.
The new tax bill also raises the Child Tax Credit to $2,200 per qualifying child for the 2025 tax year (up from $2,000 in 2024). Additionally, more of the credit is refundable, meaning some families may see a larger tax refund even if their tax liability drops to $0.
The income thresholds for the CTC remain the same — the credit still phases out based on your filing status and modified adjusted gross income (MAGI). For a full walkthrough of eligibility, phase-outs, and how this compares to prior years, check out our complete Child Tax Credit Guide.
A new deduction for qualifying overtime pay is now available, effective in the 2025 tax year. You can deduct up to $12,500 if you’re a single filer or up to $25,000 if you’re married filing jointly. The deduction begins to phase out once your MAGI hits $150,000 for single filers or $300,000 for joint filers.
You can claim the overtime deduction even if you claim the standard deduction. It is a temporary deduction, available only from 2025 to 2028.
The Working Families Tax Cut Act also creates a new deduction for certain tip income for 2025 through 2028. You can deduct up to $25,000 in qualifying tips per tax return, and the deduction begins to phase out once your MAGI reaches $150,000 for single filers or $300,000 for joint filers.
There is another temporary deduction for car loan interest for tax years 2025 through 2028. You can deduct up to $10,000 of interest paid on a qualifying vehicle loan each year through 2028. This tax break begins to phase out once your MAGI exceeds $100,000 (or $200,000 for married couples filing jointly).
Your vehicle must meet specific requirements (including U.S. final assembly and a valid VIN) to qualify.
The bill limits which tax benefits can be claimed with an Individual Taxpayer Identification Number (ITIN). Many popular credits and new deductions — including the Child Tax Credit, Earned Income Tax Credit, education credits, as well as the new tips deduction, new overtime deduction, and the new senior deduction — now require a valid Social Security number (SSN).
ITINs remain fully valid for filing tax returns, and certain benefits are still available to ITIN filers. However, this change is likely to cause confusion this tax season, particularly for mixed-status families.
Another tax bill provision temporarily raises the SALT deduction cap beginning in the 2025 tax year. This increase gives some taxpayers in high-tax states more room to deduct state and local tax payments.
The SALT cap rose to $40,000 (up from $10,000) in 2025 and will increase each year slightly through tax year 2029. If your MAGI exceeds $500,000 ($250,000 for those married filing separately), your SALT cap gradually reduces, but it will never be less than $10,000.
This is a particularly useful change if you live in a state or city with higher tax rates.
For the 2025 tax year, the Working Families Tax Cut Act resets the Form 1099-K reporting threshold to $20,000 in payments and at least 200 transactions. This change means far fewer taxpayers will receive a 1099-K for occasional sales, marketplace listings, or smaller side gigs.
If you only sell items casually or earn minimal side income, you likely won’t hit the threshold — though you still need to report taxable earnings on your income tax return.
The Working Families Tax Cuts Act didn’t just create new tax benefit opportunities — it also got rid of a few existing tax savings opportunities. The big one that has already ended is the electric vehicle (EV) credit. Only qualifying vehicles delivered on or before Sept. 30, 2025, will qualify for the EV credit. Some states may continue offering their own incentives, but at the federal tax level, this credit no longer applies for vehicles purchased after Sept. 30, 2025.
In addition, several other clean energy and energy-efficient tax credit programs will expire after Dec. 31, 2025, meaning home upgrades you make in tax year 2026 may no longer qualify for a federal tax credit.
The Adoption Credit increases to $17,280 for 2025 and is fully available to taxpayers with a MAGI below $259,190 (the credit begins phasing out above that amount). The Working Families Tax Cut Act also made the credit partially refundable for the first time, meaning eligible taxpayers can receive up to $5,000 as a refund even if they owe no tax.
The qualified business income (QBI) deduction is now permanent for small business owners and self-employed taxpayers. The deduction stays at 20% of your qualified business income, and the phase-out thresholds for specified service trades or businesses (SSTBs) increase to $197,300 for single filers and $394,600 for married couples filing jointly.
The new tax bill also restores 100% bonus depreciation for qualifying property placed in service beginning Jan. 20, 2025. That means eligible small business owners can deduct the full cost of equipment or improvements upfront rather than spreading it across several years.
The IRS announced that it would not update the withholding tables for 2025, despite the extensive tax changes brought about by the Working Families Tax Cuts Act. That means some workers may over-withhold and potentially see a larger tax refund when filing for the 2025 tax year — especially if your tip income or overtime compensation ends up being deductible.
The EITC is a popular tax credit for low- to moderate-income working taxpayers. The amount you can claim depends on your income, filing status, and the number of children you have.
The maximum EITC you can claim for 2025 is $8,046. Here are the 2025 income limits for the credit:
| Number of children | Maximum EITC | Max income: Single / head of household | Max income: Married joint filers |
| 0 | $649 | $19,104 | $26,214 |
| 1 | $4,328 | $50,434 | $57,554 |
| 2 | $7,152 | $57,310 | $64,430 |
| 3+ | $8,046 | $61,555 | $68,675 |
Some significant retirement updates took effect in 2025 thanks to the SECURE 2.0 Act of 2022 (also called SECURE 2.0). The main thing? New “super catch-up” contributions are available depending on your age and whether your employer plan allows it. We broke everything down for you below.
If your employer 401(k) plan allows it, workers who turn age 60, 61, 62, or 63 by the end of the 2025 calendar year can make a larger catch-up contribution than is typically allowed:
Once you turn 64, the catch-up limit returns to the standard 50+ catch-up limit ($7,500 in 2025).
SIMPLE IRAs also receive a new super catch-up limit, similar to 401(k) rules:
Once you turn 64, the limit reverts to the standard $3,500 allowed catch-up amount.
Starting in 2025, the IRS rolled out Form 1099-DA, a new information return designed to improve reporting for digital asset transactions (like cryptocurrency). Brokers and platforms that handle digital asset sales will use Form 1099-DA to report proceeds (and eventually cost basis) from transactions to both taxpayers and the IRS.
While this form doesn’t create a new tax, it does standardize crypto and digital asset reporting, similar to how Form 1099-B works for stocks. If you buy, sell, or trade digital assets, you may receive Form 1099-DA beginning in 2026.
For the first time since the pandemic, defaulted federal loans can trigger a refund offset. This means if you’re behind on your student loan payments, the federal government can garnish your federal tax refund or state refund to cover unpaid balances.
If you opt for a paper refund check in 2026, be prepared for delays. In 2025, the IRS announced that it would phase out the use of paper checks. Those who request a paper check by mail will need to wait 6 weeks or longer to receive their payment. For this reason, the IRS is recommending that taxpayers choose direct deposit or another secure electronic method when deciding how to receive their tax refund this year. Limited exceptions will be available for those without access to bank accounts, such as prepaid debit cards or digital wallets.
Even with several tax law updates in 2025, some familiar rules remained unchanged from 2024. Here are a few things you can still count on this year: