(CNN) — The One Big Beautiful Bill Act, which was signed into law in July, created several new tax provisions and made changes to others that are in effect for this year. So it’s worth having the rundown of some of the key ones before preparing your 2025 tax return.
Some of the provisions may result in a lower tax bill for you – or a higher refund. But figuring out whether you are eligible to claim them – and what documents you’ll need to do so – may 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 further complicates tax filing,” a Tax Foundation analysis notes.
Here are 10 of the most notable changes for individual filers:
1. A higher standard deduction
The standard deduction for 2025 was raised to $15,750 for single filers, up from the $15,000 previously in place. For married couples filing jointly, it is increased to $31,500, up from $30,000. And for heads of households, their standard deduction will be $23,625, up from $22,500.
Most filers take the standard deduction because it is higher than the total of itemized deductions they are eligible to claim (e.g., mortgage interest, state and local taxes, charitable contributions, medical expenses, etc.).
2. A personal deduction for seniors
Anyone born before January 2, 1961 and who has a valid Social Security number may 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 deductions.
But the your deduction will be reduced if your modified adjusted gross income (MAGI) is more than $75,000 ($150,000 for joint filers) but less than $175,000 ($250,000). Above those levels, the tax break is disallowed.
3. A higher state and local tax deduction
What had been a $10,000 cap on the amount of state and local taxes that itemizers may deduct on their federal income tax return is now $40,000 ($20,000 if married filing separately).
The so-called SALT deduction lets you deduct either your state and local income taxes or your state and local general sales taxes. On top of that, you also may be allowed to deduct your property taxes, assuming your income or sales taxes don’t put you over the cap.
If you’re a very high-income filer you will be limited in how much you may deduct. That includes anyone with a MAGI over $500,000 ($250,000 if married filing separately).
4. Car loan interest deduction
If you bought a new vehicle (eg, a car, motorcycle or van) for personal use this year and you took out a loan to finance the purchase, you may be allowed to deduct at least some of the interest. But only if the final leg of production for your vehicle was done in the United States, which is something that should be disclosed when you look up your Vehicle Identification Number (VIN).
But you won’t be allowed to deduct more than $10,000 a year – an amount that is reduced if your MAGI is over $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 be required to furnish to both you and the IRS a form that reports on the interest you paid, they don’t have to do so this year. So, for record-keeping purposes, ask your lender or check your loan statements to help you document the interest you paid in 2025, said Tom O’Saben, director of tax content at the National Association of Tax Professionals.
To claim the deduction you will need to fill out a new form – Schedule 1-A – according to draft instructions from the IRS.
5. Tax deduction for tips
While the Trump administration has billed this new break as “no tax” on tips, that is inaccurate. It is a deduction for some or all of one’s “qualified” tips, subject to income limitations.
“Qualified” 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 Treasury’s preliminary list of the industries in which tipping is considered customary.)
Eligible workers can deduct up to $25,000 in tipped income. But they will only get the full value of their deduction if their MAGI is below $150,000 ($300,000 if married filing jointly).
Many tipped workers may not benefit from the provision since they earn too little to owe federal income tax. Middle-income workers who earn tips will be most likely to qualify for the deduction.
To claim the new tax break, you will need to fill out a new form – Schedule 1-A – according to draft instructions from the IRS.
6. Tax deduction for overtime pay
The Trump administration has billed this new break as “no tax” on overtime. But that is not accurate. It is a deduction for a portion of what is considered “qualified” overtime pay.
The tax break will only apply to the portion of qualified overtime pay above your usual wage, but that portion will be limited to no more than the “half” in time-and-a-half pay, according to IRS guidance. So if you make $20 an hour and earn $30 for overtime, the deductible portion would be $10. If you earn $35 for overtime, the deductible portion would still just be $10.
Also, what constitutes “qualified” overtime for the purposes of the deduction will be driven by the Federal Labor Standards Act, not state or city law or union rules, O’Saben said. That generally means time worked beyond a 40-hour week at no more than time-and-a-half pay.
Lastly, you may only deduct up to $12,500 of eligible 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). You will be allowed to deduct a smaller amount if your MAGI is higher, but the deduction will be disallowed if your income is exceeds $275,000 ($550,000 for married couples).
To claim it, you will need to fill out a new form – Schedule 1-A – according to draft instructions from the IRS.
7. A higher child tax credit
The OBBBA raised the maximum amount for the child tax credit to $2,200 for each qualifying child, up from $2,000 previously scheduled for this year. It also requires, among other things, that parents and their qualifying children have Social Security numbers.
The IRS has more here on the eligibility rules and how the credit works.
8. Expiration of clean vehicle tax credits
The OBBBA accelerated the expiration dates of the new clean vehicle tax credit (worth up to $7,500) and the used clean vehicle credit (worth up to $4,000). A credit is a dollar-for-dollar reduction of your tax bill.
Neither will be available for any plug-in electric (EV) or fuel cell vehicle (FCV) you purchased after September 30, 2025.
If you did purchase such a vehicle for personal use this year before September 30, and otherwise qualify to take the credit, you will have to fill out Form 8936 and include it with your tax return.
9. ‘Trump Accounts’ for babies
The federal government will put $1,000 into individual investment accounts for babies born between January 1, 2025, and December 31, 2028.
To be eligible, the baby must be a US-born citizen, and both the parents and the baby must have Social Security numbers.
To alert Treasury that you had a new baby in 2025 and qualify for the federal seed money, the “fastest, safest, and easiest way to make the election(s) is to file Form 4547 with your current-year e-filed tax return,” according to draft instructions from the IRS.
10. New crypto tax reporting
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 sold or exchanged your crypto holdings on such a platform in 2025, you should expect a 1099-DA to be sent to you by mid-February. That doesn’t mean all your crypto activity will be reported, however. Here is more on what will be excluded from your 1099-DA.
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