President Donald Trump‘s One Big Beautiful Bill Act will have some significant effects on this year’s tax filing season, with provisions such as “no tax on tips” and “no tax on overtime” allowing people to claim more deductions.
Average tax refunds have increased by over 11% this year. With Tax Day on Wednesday, here are some points people should know about how the so-called “working families tax cuts” will affect their 2025 tax filing season.
No taxes on tips, overtime, or auto loan interests
Working people can claim deductions of up to $25,000 on cash tips. This applies to single taxpayers with a modified adjusted gross income of up to $150,000 and to joint filers with a modified adjusted gross income of up to $300,000, reduced by $100 per every $1,000 of income above that cap. It applies to any tips received on or before Dec. 31, 2024.
People can also claim deductions of up to $12,500 on overtime for a single taxpayer. This goes up to $25,000 for joint filers. The same modified adjusted gross income and phaseout applies as it does for the no tax on tips policy.
The One Big Beautiful Bill Act also allows filers to claim deductions of up to $10,000 on auto loan interests for vehicles produced in the United States. This applies to cars purchased between Dec. 31, 2024, and before Jan. 1, 2029. The bill also ended the electric vehicle tax credit on Sept. 30, 2025.
Increased standard deduction
The law also extends and enhances the increased standard deduction for taxpayers. According to the Bipartisan Policy Center, people can now file for a standard deduction of $15,750 for single taxpayers and $31,500 for joint filers, up $750 and $1,500, respectively.
Child tax credit and adoption credit
Trump’s hallmark tax legislation also increased the child tax credit by $200 to $2,200.
The bill further enhanced the adoption credit, making it partially refundable. Compared to the nonrefundable adoption credit in place before, now taxpayers can file to make up to $5,000 of the credit refundable.
TRUMP ADMINISTRATION TOUTS 24% INCREASE IN TAX REFUNDS
Deductions for taxpayers over 65
The One Big Beautiful Bill Act also allows people 65 and older to file for a deduction of up to $6,000. The deduction will last each tax year until Jan. 1, 2029.
There are several other ways filers could be affected, including through the Trump accounts for children and deductions for increased state and local taxes.
