The standard deduction increased for 2025 and 2026, and a new temporary “bonus” deduction for adults 65 and older begins in 2025. The child tax credit increased to $2,200 for the 2025 and 2026 tax years; retirement plan contribution limits for IRAs and 401(k)s also increased for 2026.
increased Child Tax Credit - increased from $2,000 to $2,200 for qualified taxpayers. additional senior deduction (2025 through 2028) - additional $6,000 deduction for taxpayers 65 and older with phaseout for MAGI over $75,000 (over $150,000 for Married Filing Jointly filers)
Deduction for Seniors
New deduction: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
Some of the major tax changes effective from April 1, 2025, are revised tax slabs, rebate of up to Rs. 60,000, revised ITRU deadlines, calculation of partner's remuneration allowable as a deduction and revised TDS/TCS threshold limits. What is the Rebate available under section 87A?
Under the new income tax regime for 2025-26, any taxable income up to ₹12,00,000 attracts a full rebate of ₹60,000 (under Section 87A), resulting in a nil tax liability.
For the 2025 tax year (filing in 2026), major changes include making the TCJA rates permanent, introducing new deductions for seniors, tips, and overtime (via the One Big Beautiful Bill Act signed July 4, 2025), increasing the Child Tax Credit, boosting the SALT deduction cap, and adjusting brackets for inflation, with benefits for middle-income earners, but some restrictions on itemizers.
New US income tax rules, primarily from the 2025 "One Big Beautiful Bill," introduce significant changes for 2025 and beyond, including an enhanced deduction for seniors, new deductions for overtime pay, tips, and car loan interest, a higher SALT (State & Local Tax) deduction cap, expanded Child Tax Credits, permanent tax brackets, and increased retirement contribution limits, aimed at making the 2017 Tax Cuts and Jobs Act provisions permanent and adding new benefits, effective primarily in 2025.
The three tax breaks Trump referenced are all temporary and in effect from 2025 through 2028. They are federal breaks; state and local taxes may still apply.
The One Big Beautiful Bill Act (OBBBA) or the Big Beautiful Bill (P.L. 119-21), is a U.S. federal statute passed by the 119th United States Congress containing tax and spending policies that form the core of President Donald Trump's second-term agenda. The bill was signed into law by Trump on July 4, 2025.
Seven major tax cuts took effect for 2025 under the OBBBA:
To avoid the 22% tax bracket (or any higher bracket), focus on reducing your taxable income through strategies like maxing out 401(k)s and HSAs, deferring bonuses, tax-loss harvesting, smart charitable giving, and strategic asset location, understanding that higher rates only apply to income within that bracket, not your entire income.
This deduction starts in tax year 2025, meaning retirees aged 65 or older may qualify for up to $6,000, while married couples where both partners meet the age requirement can claim up to $12,000. The deduction is scheduled to remain in effect through 2028, unless Congress renews it.
The new senior tax deduction of up to $6,000 for single filers and $12,000 for joint filers, was created to help cover taxes on Social Security benefits. Taking the new senior deduction helps to reduce your taxable income, which can mean less tax or potentially an even bigger tax refund when you file your return.
To avoid taxes on Social Security, keep your combined income below IRS thresholds ($25k single, $32k married) by reducing taxable withdrawals from 401(k)s/IRAs and using Roth accounts, delaying benefits, making Qualified Charitable Distributions (QCDs) from IRAs, or having taxes withheld via Form W-4V. Strategies involve using tax-advantaged accounts (Roth, HSA), tax-loss harvesting, and lowering taxable income from other sources.
The extra $144 added to Social Security usually comes from the Medicare Part B Giveback benefit, offered by some Medicare Advantage (Part C) plans, which pays back some or all your Part B premium, showing up as extra money in your check if it's deducted from your Social Security. To qualify, you need Original Medicare (Parts A & B), pay your own Part B premium, live in a plan's service area, and enroll in a specific Medicare Advantage plan that offers this "rebate," with the amount varying by plan and location.
The standard deduction increased for 2025 and 2026, and a new temporary “bonus” deduction for adults 65 and older begins in 2025. The child tax credit increased to $2,200 for the 2025 and 2026 tax years; retirement plan contribution limits for IRAs and 401(k)s also increased for 2026.
Taking advantage of tax credits and deductions, like the Earned Income Credit and Child and Dependent Care Credit, can reduce the amount you owe in taxes, while reviewing your W-4 to adjust withholding and revisiting your filing status could potentially help you figure out how to get a bigger tax refund.
The One, Big, Beautiful Bill Act significantly affects federal taxes, credits and deductions. It was signed into law on July 4, 2025, as Public Law 119-21, and takes effect in 2025.