This year’s tax season — which officially kicks off Monday — will be a doozy.
The Internal Revenue Service anticipates receiving some 164 million individual income tax returns, with the bulk filed online, as Americans digest the many provisions of President Trump’s signature One Big Beautiful Bill Act. Upgrades include measures relating to tips and overtime, a hike in the maximum child tax credit, an increased cap for state and local tax deductions, and a bigger deduction for qualifying seniors.
The Bank of America Institute projects a 26% boost to refunds thanks to the changes, “though much of the increase is likely to be concentrated among middle- and higher-income filers.”
All said, average refunds could be up between $300 and $1,000 compared to recent years, when typical refunds averaged around $3,000, according to the Tax Foundation.
Still, a survey from Intuit’s TurboTax found 2 in 5 Americans didn’t know anything about the new tax changes, while about 33% felt they’d be worse off, CPA and TurboTax expert Lisa Greene-Lewis told Yahoo Finance.
“Filers are going to see up to $1,000 more in their refund, or a lower balance due,” Greene-Lewis said. While this filing season may seem intimidating, “2017 was the last time that there were big tax law changes, and we made it through that time,” Greene-Lewis said.
Here’s what to know before taxes are due April 15.
Read more: Free tax filing: How to file your 2025 return for free
Deciphering deductions
The standard deduction — which reduces a payer’s taxable income — is $15,750 for single filers this tax season and $31,500 for married couples filing jointly, a modest boost from the previous year. Taxpayers over 65 can also temporarily claim up to $6,000 in addition to either the standard deduction or itemized deductions, according to H&R Block.
For the senior deduction, “the biggest beneficiaries are upper-middle-class seniors with significant wealth, who have a lot of discretion over how much income to realize in a given year,” Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, a nonpartisan group that advocates for fiscal responsibility, told Yahoo Finance last year.
The senior deduction, which is available per eligible individual, phases out for filers with modified adjusted gross incomes over $75,000, or $150,000 for couples, the IRS said.
Read more: Standard deduction vs itemizing: How to decide
Tips and overtime
Certain workers who have historically received tips, like restaurant servers and others designated by the IRS, will temporarily be able to deduct up to $25,000 in qualified tips on their federal returns through 2028. The benefit phases out at incomes above $150,000, and workers will still have to pay federal taxes on tips beyond the $25,000 cap.
