Many taxpayers in the United States could see larger refunds this filing season, thanks to expanded deductions introduced under last year’s sweeping tax legislation. Tax professionals say the changes may significantly reduce taxable income for certain workers, seniors and buyers, potentially boosting refund amounts.
The updated law expands tax deductions for several categories of earners. According to the Internal Revenue Service, early filing data already indicates refunds are trending higher this season.
Mark Steber of Jackson Hewitt Tax Service told KGW that the reforms represent the most substantial tax shift he has seen in decades. “We are not only expecting bigger refunds, but a lot bigger refunds,” he said.
Tip income deduction
Service industry workers stand to benefit from a new deduction on qualified tip income. Eligible taxpayers may deduct up to $25,000 in reported tips, reducing their taxable earnings and potentially increasing refunds.
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This change could have a meaningful impact on bartenders, servers and hospitality workers whose income relies heavily on gratuities.
Overtime pay tax break
Employees who worked extra hours may also qualify for relief. The law allows a deduction of up to $12,500 in overtime earnings for eligible workers, offering additional savings for those who logged significant overtime during the year.
Incentives tied to US-assembled vehicles
Taxpayers who purchased a vehicle assembled in the United States in 2025 may qualify for an interest deduction. Steber explained that buyers with qualifying auto loans can deduct up to $10,000 in loan interest, even without itemizing deductions.
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Additional deduction for seniors
Americans aged 65 and older can claim an additional $6,000 deduction, or up to $12,000 for married couples filing jointly. The provision was designed to offset the tax burden many seniors face, including taxes on Social Security benefits.
Early IRS filing data shows average refunds are running roughly 14% higher than at the same point last year, suggesting the expanded deductions are already affecting returns.
Tax professionals advise reviewing eligibility carefully or consulting a tax expert to ensure all applicable deductions are claimed.
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