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A new tax law brings several updates that could affect your 2025 return and how you file in 2026, especially if you earn tips, are 65 or older, claim family credits, or own a home and itemize state and local taxes. Most changes take effect Jan. 1, 2026, while some apply retroactively to 2025 as part of last summer’s “One Big Beautiful Bill” legislation passed by Congress and signed into law by President Donald Trump.

Nicole Lazzeri

“For many people, the biggest differences won’t be shocking,” said Nicole Lazzeri, assistant teaching professor at the Leeds School of Business. “But certain provisions, like how tips and overtime are treated, can have an immediate impact on your refund or tax bill.”

Lazzeri recently spoke with CU 91���Ҹ� Today to explain the changes to watch for, who is most affected and what steps taxpayers should take now.

What do taxpayers need to know about the recent tax law changes?

The legislation makes permanent many of the temporary tax changes from the 2017 Tax Cuts and Jobs Act and adds new provisions affecting tips and overtime, standard deductions, family credits, and benefits for seniors. Some updates apply retroactively to 2025, while most take effect Jan. 1, 2026. Certain provisions, like tax treatment for tips, overtime, and student loan benefits, can have an immediate impact on refunds or tax bills.

What’s the biggest change for taxpayers this filing season?

The biggest change affects people who itemize deductions, which is about 10% of taxpayers right now. But this could increase that number: The state and local tax deduction (known as SALT) has increased from $10,000 to $40,000, although there’s still an income threshold of $500,000. This is a big deal for middle-income homeowners who previously didn’t benefit enough to itemize, like someone who just bought their first home. This means a couple paying state income taxes, property taxes and mortgage interest could now exceed the standard deduction and reduce their taxable income by thousands more than before.

Will everyone benefit from this change?

Not necessarily. If you don’t own a home or you only pay state income tax, it’s less likely that you’d benefit. Charitable donations or other deductible expenses can make itemizing more worthwhile, but otherwise, many people will still just take the standard deduction.

Did the standard deduction change?

Yes, it increased by $750 for everyone. It’s a modest increase, so it won’t have a huge impact for most people.

Will this change how much tax I actually owe?

Potentially, but it won’t be a huge impact for most taxpayers. The tax brackets increased slightly, meaning you’ll pay a bit more or less in each bracket, but withholding estimates weren’t changed. If you’ve been over-withholding, you might get a bigger refund. If you’ve been under-withholding, you could still owe, just slightly less.��So your refund will depend on how much you have already paid toward your 2025 tax liability.

Will the new rules affect tip income?

Yes. If your tips are included in your W-2 income—or if you’re self-employed, like an Uber driver—you could get a significant deduction, up to $25,000. The reporting requirement doesn't begin until 2026, but the tips need to be included in income. This is expected to impact a lot of service workers.��

Are there any new tax breaks for older taxpayers?

There’s a $6,000 “senior deduction” for taxpayers over 65. It helps reduce the portion of Social Security that’s taxable. Social Security is still reported, but for many seniors with fixed incomes, this deduction can significantly lower their taxable income. The limits are $75,000 for single filers and $150,000 for married couples filing jointly, so higher earners may not benefit.

Has the child tax credit changed?

The child tax credit increased from $2,000 to $2,200 and will now rise with inflation. It’s available to many taxpayers—up to $200,000 for single filers or heads of household, and $400,000 for married couples filing jointly. Part of the credit is refundable for lower-income families, and there’s an additional child tax credit of up to $1,700 per child that can give money back even if you owe little or no tax.

When should I consider getting help filing my taxes?

If your tax situation is more complex than just a W-2—like if you have tips, self-employment income, investments or multiple deductions—it’s a good idea to get help. Even if you don’t owe taxes, filing can get you a refund and protects against identity theft.��

Free support is available through the Volunteer Income Tax Assistance program, and certified or trained volunteers can ensure you claim all deductions and credits correctly. CU 91���Ҹ� students from the Leeds School of Business are offering free, in-person tax preparation through the��VITA program from Feb. 20 through April 11, 2026. The program serves qualifying residents, including students, lower-income filers, seniors, people with disabilities and non-English speakers.��