The 2025 tax refund rules could change what you owe or receive when you file in 2026. The One Big Beautiful Bill Act adds or expands deductions and credits for certain seniors, families, workers and businesses, while ending some energy incentives. Reviewing your income, filing status and eligible expenses can help you prepare.
How the 2025 tax refund rules change
The changes apply to tax year 2025, the return most people file in 2026. Some provisions make earlier tax rules permanent, while others create new deductions or revise existing benefits. Their effect depends on your circumstances: a senior deduction will not help a younger filer, and a new deduction for tips or overtime is limited to eligible workers.
The law makes permanent many changes from the 2017 Tax Cuts and Jobs Act, including its larger standard deduction and seven tax brackets. The brackets remain 10%, 12%, 22%, 24%, 32%, 35% and 37%, with the first two adjusted for inflation. Personal exemptions for individuals, spouses and dependents are removed, except for the separate senior deduction described below.
For taxpayers age 65 and older, the law creates an additional $6,000 deduction per person through tax year 2028. It is on top of the existing senior standard deduction. A married couple filing jointly could qualify for $12,000 in additional deductions if both spouses meet the age requirement. The benefit phases out when modified adjusted gross income exceeds $75,000 for an individual or $150,000 for a couple filing jointly.
Compare the main deductions and credits
The figures below show how the new provisions differ. A deduction reduces the income used to calculate tax; it is not the same as a refund payment. A credit reduces tax owed, and refundability determines whether an eligible credit can be paid beyond a taxpayer’s remaining tax liability. Check the specific eligibility rules before counting any benefit toward your return.
| Provision | 2025 rule | Who may qualify |
|---|---|---|
| Senior deduction | $6,000 per eligible person through 2028 | Taxpayers age 65 and older, subject to income phaseouts |
| Child tax credit | Increased to $2,200 and indexed for inflation | Qualifying families with children |
| Adoption credit | Up to $5,000 is refundable | Eligible taxpayers who adopt |
| Business equipment | 100% deduction for qualifying equipment | Business owners and self employed filers; equipment must be placed in service on or after Jan. 20, 2025 |
| SALT deduction cap | $40,000, up from $10,000 in the prior tax year for most incomes | Taxpayers who itemize eligible state and local taxes |
| Tips and overtime | Deduction for income up to $12,500, or $25,000 for joint filers | Eligible workers; married taxpayers filing separately are excluded |
Families also have access to the expanded child tax credit, which is permanent and indexed for inflation. The adoption credit now includes a refundable amount of up to $5,000. Separately, families may open Trump Accounts for children under 18. Individuals and employers can fund these accounts up to $5,000 per year. U.S. citizens born from Jan. 1, 2025, through Dec. 31, 2028, are eligible for a one time $1,000 federal contribution.
Check income, filing status and withholding
Start by comparing your 2024 and 2025 income. The change can help you understand how the updated brackets and income limited benefits might affect your tax calculation. Then list the deductions and credits that fit your situation, including age, dependents, homeownership, work arrangements and business expenses. Do not assume a benefit applies just because it appears in the new law.
Filing status matters. The deductions for tips and overtime are not available to married taxpayers who file separately. The senior deduction has different income thresholds for individual and joint filers. The higher state and local tax deduction cap applies for most incomes, so income can affect whether the full change is relevant to you.
Review your tax withholding against your expected 2025 income and deductions. Withholding is money paid toward a tax bill during the year. If the amount taken from your pay does not reflect your circumstances, you could have prepaid too much or too little. A refund is the result of payments exceeding the final tax owed, so a larger refund is not automatically the same as a larger tax benefit.
Some filers may also be able to deduct interest paid on a car loan, according to the provisions outlined for the 2025 return. Confirm the eligibility rules and the records required before including it in your estimate. Keep documents that support income, expenses and any credit or deduction you plan to claim.
Practical steps before you file in 2026
Use a short review process before preparing your return. It can help you spot changes that call for a closer look, rather than relying on last year’s approach.
- Compare 2024 and 2025 income, then check which tax bracket rules apply to your filing situation.
- List potential deductions and credits by category, including senior status, children, adoption, business equipment, tips, overtime and state or local taxes.
- Consider whether itemizing could make sense under the revised SALT cap. Grouping eligible deductions or timing charitable giving may matter for some taxpayers, but the effect depends on their records and total deductions.
- If you have cash available, review whether you can make a contribution to a qualified Roth or traditional IRA for 2025 by the tax filing deadline. Check account rules and contribution limits before acting, and keep 2026 contributions in mind.
- Review investment activity. Some taxpayers may consider realizing gains in 2025 if applicable rates are lower, but the tax effect depends on individual circumstances. Cryptocurrency trades remain reportable even if no Form 1099 DA arrives. Many investors will receive that form for the first time.
- Check the dates and eligibility rules for credits that have changed. Home green energy credits have expired, but new and used clean vehicle credits remain available for qualifying purchases made on or before Sept. 30, 2025.
These checks are especially useful if your income, family situation or work changed during the year. Gather receipts and account statements before filing, and verify any uncertain provision with a qualified tax preparer or the relevant official guidance. The law changes several areas at once, so a deduction that looks valuable in isolation may not determine the final refund.
Will the new rules increase your refund?
There is no single answer for every household. A qualifying senior, a family claiming a credit or a worker with eligible tip income may see a different result from someone whose former energy credit has ended. Your final refund also depends on withholding and other payments, not simply the number of new deductions available.
Before filing, compare your expected 2025 return with last year’s records, confirm which provisions fit your situation and check that your withholding reflects the changes. That preparation can clarify whether the new rules affect your tax bill, your refund or neither.