What to know now about changes to your 2025 taxes

A big beauty bill act, which was signed into law in July, created several new tax provisions and made changes to others that are effective for this year. So before preparing your 2025 tax return it’s worth doing a rundown of some of the major ones.

Some provisions may result in a lower tax bill – or a higher refund – for you. But figuring out whether you’re eligible to claim them — and what documents you need to do so — can be more confusing and time-consuming than usual for tax filers. and Tax professionals.

“The United States tax code is complex, not simple. Unfortunately, the OBBBA makes tax filing more complicated,” notes a Tax Foundation analysis.

Here are the 10 most notable changes for individual filers:

The standard deduction for 2025 was raised to $15,750 for single filers, up from $15,000 previously in place. For married couples filing jointly, it increased from $30,000 to $31,500. And for heads of household, their standard deduction will increase from $22,500 to $23,625.

Many filers take the standard deduction because it exceeds the total itemized deductions they are eligible to claim (eg, mortgage interest, state and local taxes, charitable contributions, medical expenses, etc.).

Anyone born before January 2, 1961 and with a valid Social Security number can now take a $6,000 deduction (or $12,000 if married filing jointly and each spouse qualifies). This new deduction is taken on top of your standard deduction or itemized deduction.

But if your modified adjusted gross income (MAGI) is more than $75,000 ($150,000 for joint filers) but less than $175,000 ($250,000), your deduction will be reduced. Above those levels, the tax break is denied.

There was a $10,000 cap on the amount of state and local taxes that filers could deduct on their federal income tax returns now at $40,000 ($20,000 if married filing separately).

The so-called SALT deduction lets you deduct your state and local income taxes or your state and local general sales taxes. On top of that, you’re also allowed to deduct your property taxes, so your income or sales taxes don’t put you over the cap.

If you are a very high-income filer you will be limited in how much you can deduct. This includes anyone with more than $500,000 in MAGI ($250,000 if married filing separately).

If you bought a new vehicle (eg, car, motorcycle or van) for personal use this year and took out a loan to buy it, you are allowed to deduct at least some of the interest. But only if your vehicle’s final stage of production was done in the United States, which should be disclosed when you look up your Vehicle Identification Number (VIN).

But you’re not allowed to deduct more than $10,000 per year — less if your MAGI is more than $100,000 ($200,000 if married filing jointly). Once your MAGI exceeds $149,000 ($249,000 for joint filers), the deduction is disallowed.

While your lender will require you and the IRS to submit a form reporting the interest you paid, they won’t have to do so this year. So, for record-keeping purposes, ask your lender or check your loan statements for help documenting the interest you paid in 2025, said Tom O’Saben, director of tax content for the National Association of Tax Professionals.

To claim the deduction, you must fill out a new form — Schedule 1-A — according to draft instructions from the IRS.

While the Trump administration has billed this new break as “no tax” on tips, that’s incorrect. This is a deduction for some or all “qualified” tips, subject to income limits.

“Eligibility” is defined as “voluntary cash or charged tips” that workers receive from customers or through tip sharing in industries for which tipping is common. (Here is the Treasury’s preliminary list of industries in which tipping is considered customary.)

Eligible workers can deduct up to $25,000 in tipped earnings. But they’ll get the full value of their deduction only if their MAGI is less than $150,000 ($300,000 if married filing jointly).

Many tipped workers do not benefit from the provision because they earn too little to pay federal income taxes. Middle-income workers who earn tips are more likely to qualify for the deduction.

To claim the new tax exemption, you must fill out a new form — Schedule 1-A — according to draft instructions from the IRS.

The Trump administration has billed this new break as “no tax” on overtime. But that is not correct. This is a deduction for the portion of what is considered “qualified” overtime pay.

The tax deduction will only apply to the portion of qualified overtime pay above your regular wages, but that portion will not be limited to more than “half” from time to time, according to IRS guidance. So if you earn $20 an hour and earn $30 for overtime, the deductible portion would be $10. If you earn $35 for overtime, the deductible portion will still be $10.

Also, what constitutes “qualified” overtime for deduction purposes will be governed by the federal Labor Standards Act, not state or city laws or union regulations, O’Saben said. This usually means time worked beyond a 40-hour week at no more than time-and-a-half pay.

Finally, you can deduct only up to $12,500 of qualified overtime compensation ($25,000 for joint filers). And you can only take the full deduction if your MAGI is less than $150,000 ($300,000 for joint filers). If your MAGI is high you will be allowed to deduct a small amount, but if your income exceeds $275,000 ($550,000 for married couples) the deduction will be disallowed.

To claim it, you need to fill out a new form – Schedule 1-A – as per the draft instructions from the IRS.

OBBBA increased the maximum amount for the Child Tax Credit to $2,200 for each eligible child, up from $2,000 previously set for this year. It also requires, among other things, that parents and their qualifying children have Social Security numbers.

The IRS has more information about eligibility rules and how the credit works here.

OBBBA extended the expiration dates for the New Clean Vehicle Tax Credit (valued up to $7,500) and the Used Clean Vehicle Credit (valued up to $4,000). A credit is a dollar-for-dollar reduction of your tax bill.

It won’t be available for any plug-in electric (EV) or fuel cell vehicle (FCV) you buy after September 30, 2025.

If you purchased such a vehicle for personal use before September 30 of this year, and otherwise qualify for the credit, you must complete Form 8936 and include it on your tax return.

The federal government will put $1,000 into individual investment accounts for children born between January 1, 2025 and December 31, 2028.

To be eligible, the child must be a US-born citizen, and both parents and child must have Social Security numbers.

To alert the Treasury that you had a new baby in 2025 and are eligible for federal seed money, “the fastest, safest and easiest way to make the election(s) is to file Form 4547 with your current year’s e-file tax return,” according to the IRS’s draft instructions.

For the first time, your crypto transactions on any centralized crypto exchange like Coinbase will be reported to the IRS and to you. So, if you sell or exchange your crypto holdings on such a platform in 2025, you should expect a 1099-DA to be sent to you in mid-February. This does not mean that all of your crypto activity will be reported, however. Here’s more about what will be excluded from your 1099-DA.

CNN’s Tami Luhby contributed to this story.

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