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As tax season approaches, several new federal tax changes could mean bigger refunds for many Americans, especially seniors and tipped workers.
These changes, which came with recent federal legislation in President Trump's One Big Beautiful Bill Act, offer new deductions that could significantly impact your tax return.
"Some of these things are going to create bigger refunds for taxpayers this year, which I think they will, if they're taken advantage of," said Bruce Snyder, University of Missouri-Kansas City assistant accounting professor.
The biggest changes affect three main groups: tipped workers, seniors and small business owners.
Tipped workers and those who earn overtime may now qualify for new deductions, but those benefits come with some added work on the filer this year. Workers may need to track and report tips and overtime themselves.
"Pay stubs have separate information on it, regarding how much you received in tip compensation or how much you received in overtime pay," Snyder said. "And you know, you'll have to self-report that on your tax return in order to get that deduction."
Here are the biggest changes taxpayers should know about:
- Tipped workers can deduct tips up to $25,000
- Anyone who received overtime pay can deduct up to $12,500
- Small business owners keep a 20% income deduction
- Some seniors 65 and older may receive an extra $6,000 deduction
- The increased standard deduction is now permanent
Snyder recommends organizing your paperwork now so you can maximize deductions and potentially increase your refund when tax season begins.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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