At a Glance
- The 2025 tax year keeps the Tax Cuts and Jobs Act brackets and deductions in place, thanks to the One Big Beautiful Bill.
- Seniors 65+ receive a $6,000 extra deduction, and state/local tax deductions jump to $40,000.
- New rules cut taxes on tips and overtime, and raise the Venmo/PayPal 1099-K threshold to $20,000 and 200 transactions.
- Why it matters: These changes affect how much you owe or get back when filing your 2026 return.
For taxpayers who like to file early and get refunds sooner, the official IRS tax season starts at the end of January. The 2025 tax year, which will be reported in the 2026 filing window, brings several permanent and temporary changes that can significantly alter your tax liability.
Tax Brackets & Standard Deduction
The One Big Beautiful Bill made the 2017 tax brackets and rates permanent for 2025. Taxpayers can now rely on the same seven marginal rates-10% to 37%-and the inflation-adjusted brackets listed below.
| Filing Status | 10% | 12% | 22% | 24% | 32% | 35% | 37% |
|---|---|---|---|---|---|---|---|
| Single | $1 – $11,925 | $11,926 – $48,475 | $48,476 – $103,350 | $103,351 – $197,300 | $197,301 – $250,525 | $250,526 – $626,350 | $626,351+ |
| Married filing jointly | $1 – $23,850 | $23,851 – $96,950 | $96,951 – $206,700 | $206,701 – $394,600 | $394,601 – $501,050 | $501,051 – $751,600 | $751,601+ |
| Married filing separately | $1 – $11,925 | $11,926 – $48,475 | $48,476 – $103,350 | $103,351 – $197,300 | $197,301 – $250,525 | $250,526 – $626,350 | $626,351+ |
| Head of household | $1 – $17,000 | $17,001 – $64,850 | $64,851 – $103,350 | $103,351 – $197,300 | $197,301 – $250,525 | $250,526 – $626,350 | $626,351+ |
The standard deduction also stayed high, with $15,750 for single or married filing separately, $23,625 for head of household, and $31,500 for married filing jointly.
New Deductions for Seniors, SALT, and Car Loans
The bill added a $6,000 deduction for anyone 65 or older, phased out at $75,000 MAGI for single filers and $150,000 for joint filers. State and local tax (SALT) deductions now max $40,000, dropping to $10,000 once MAGI exceeds $600,000. You can also deduct up to $10,000 of car-loan interest on qualifying U.S. vehicles, with the deduction tapering to zero at $150,000 MAGI (single) or $250,000 (joint).
- $6,000 senior deduction (single) / $12,000 (joint) – phased out at $75k/$150k MAGI, zero at $175k/$250k.
- $40,000 SALT cap – reduces $0.30 per $1,000 over $500k, drops to $10k after $600k MAGI.
- $10,000 car-loan interest deduction – phases out $200 per $1,000 over $100k (single) / $200k (joint), zero at $150k/$250k.
Tips, Overtime, Child Tax Credit, and Online Payment Reporting
Workers who receive voluntary tips can now deduct up to $25,000 of qualified tips, with the deduction ending at $150,000 MAGI (single) or $300,000 (joint). Overtime pay is similarly deductible up to $12,500 (single) or $25,000 (joint). The child tax credit rises to $2,200 per child, but the refundable portion stays at $1,700 and is indexed to inflation from 2026.
- Tips deduction: $25,000 limit; phaseout at $150k/$300k MAGI.
- Overtime deduction: $12.5k (single) / $25k (joint); same phaseout.
- Child tax credit: $2,200 per child; refundable $1,700; indexed to inflation.
- Venmo/PayPal 1099-K threshold: $20,000 total, >200 transactions.
IRS Guidance & What to Expect
On September 30, the IRS released its 2025-26 Priority Guidance Plan, outlining high-priority issues for 2025 tax guidance. Many forms and interpretations are still being finalized, so keep an eye on updates as the filing window approaches.
Key Takeaways
- 2017 tax brackets and deductions remain in place for 2025.
- Seniors 65+ get a $6,000 deduction that phases out at higher incomes.
- State/local tax deductions can reach $40,000 before tapering to $10,000.
- New deductions cut taxes on tips and overtime and raise the online payment reporting threshold.
- 1099-K thresholds now $20,000 and 200 transactions.
With these changes in mind, you can better estimate your 2026 tax liability and take advantage of the new deductions before the IRS releases final guidance.
