If you haven't heard yet, this year has brought a lot of changes to the tax landscape, and there's a good chance your taxes could be lower. From SALT deduction increases to standard deduction increases, and even new bonus deductions, you won't want to miss the details on what you (or your CPA) should take advantage of this year. 

In July 2025, some of the most significant changes to the U.S. tax code were signed into law with the One Big Beautiful Bill Act (OBBBA). While many provisions won’t take full effect until the 2026 tax year or later, there are several changes which did immediately take effect in the 2025 tax year (which you will file this tax season). Understanding these updates can help you make better planning decisions before you prepare your tax return this year.

Increased Standard Deduction

The new law increases the standard deduction for everyone depending on your filing status:

• Single: $15,000 + $750 = $15,750 total standard deduction

• Head of Household: $22,500 + $1,125 = $23,625 total standard deduction

• Married Filing Jointly: $30,000 + $1,500 = $31,500 total standard deduction

Additionally, for those age 65 or older, a new $6,000 bonus deduction can be taken with a standard deduction or with an itemized deduction. This bonus deduction is in addition to the additional deduction that already exists for those age 65 or older:

• Single 65+: $15,000 + $750 (additional for everyone) + $2,000 (existing benefit for 65+) + $6,000 (new bonus deduction) = $23,750 total standard deduction

• Head of Household 65+: $22,500 + $1,125 (additional for everyone) + $2,000 (existing benefit for 65+) + $6,000 (new bonus deduction) = $31,625 total standard deduction

• Married Filing Jointly (both 65+): $30,000 + $1,500 (additional for everyone) + $3,200 (existing benefit for both 65+) + $12,000 (new bonus deduction for both 65+) = $46,700 total standard deduction

• Married Filing Jointly (one 65+): $30,000 + $1,500 (additional for everyone) + $1,600 (existing benefit for one 65+) + $6,000 (new bonus deduction for one 65+) = $39,100 total standard deduction

State and Local Tax (SALT) Cap Increases

If you itemize your deductions, the new limit on the SALT deduction has risen from $10,000 to $40,000 for taxpayers below $500,000 - $600,000 of income (half that if married filing separately). This is a meaningful shift for those who previously couldn’t deduct the full amount of real estate taxes and state income taxes paid (the two biggest sources of SALT deductions).

Other Notable Changes

• The Child Tax Credit has increased to $2,200 (up from $2,000) per child.

• Up to $10,000 of auto loan interest can now be deducted for those who take the standard or itemized deduction if the car was made in the USA and if the loan was taken out or refinanced in 2025 or later.

• 529 accounts can now pay for more K-12 expenses and for industry-recognized credentialling programs (prior to the OBBBA, 529s could only pay for K-12 tuition and qualified college expenses).

• Many of the changes from the 2017 Tax Cuts and Jobs Act have been made permanent, including the larger standard deduction, eliminating the personal exemptions, and increasing the estate tax exemption.

• Also, there was speculation that the new bill would eliminate tax on Social Security, but this was not included in the final version of the bill, meaning Social Security income will continue to be taxed as it was previously.

In short, your tax situation may look quite different this year because of the changes mentioned above. If you notice a significant refund or additional taxes owed, you may want to adjust your tax withholdings going forward. Familiarity with these provisions can help you avoid surprises and take advantage of tax breaks made available under the new law.

Bonus: How to Reduce Your 2025 Taxes Before April 15

Most tax planning needs to be done before the end of the calendar year, but, if you are eligible, here are some things you can still do to reduce your tax bill:

• Contribute to an IRA. You have until April 15 to contribute to a traditional or Roth IRA (subject to income limitations). Contribution limits for 2025 are $7,000 or $8,000 if you are age 50 or older.

• Contribute to an HSA. Like IRAs, you have until April 15. If you have an eligible health insurance plan, an HSA can be a powerful investment tool.