The IRS began accepting 2025 tax returns on January 26, 2026, and this filing season comes with more changes than most. The "One Big Beautiful Bill" signed into law on July 4, 2025, made permanent many provisions of the 2017 Tax Cuts and Jobs Act while adding new benefits that could significantly impact your refund—or tax bill.

With the April 15 deadline approaching, understanding these changes is essential for maximizing your tax situation. Here's a comprehensive guide to what's different this year and how to take advantage of the new provisions.

Standard Deduction Gets a Boost

If you're among the approximately 90% of taxpayers who claim the standard deduction, you'll benefit from an extra 5% increase beyond the normal inflation adjustment:

  • Single filers: $15,450 (up from $14,600 in 2024)
  • Married filing jointly: $30,900 (up from $29,200)
  • Head of household: $23,175 (up from $21,900)

For a married couple, that's an additional $1,500 reduction in taxable income compared to what standard inflation adjustment alone would have provided—translating to $330 in tax savings for those in the 22% bracket.

SALT Cap Quadrupled to $40,000

One of the most significant changes affects the state and local tax (SALT) deduction:

  • Previous cap: $10,000
  • New cap: $40,000 for tax years 2025-2028
  • Married filing separately: $20,000 cap

This change primarily benefits taxpayers in high-tax states like California, New York, New Jersey, and Illinois who itemize deductions. If your combined state income taxes, local taxes, and property taxes exceed $10,000, you may now deduct substantially more.

"The $40,000 SALT cap is a game-changer for taxpayers in high-tax states who have been limited to $10,000 since 2018. Many will find itemizing now makes sense again."

— Tax policy analysis

Who Benefits Most

  • Homeowners with high property taxes
  • High earners in states with substantial income taxes
  • Taxpayers previously just below the itemizing threshold

Who Won't See Much Change

  • Taxpayers in no-income-tax states (Texas, Florida, etc.)
  • Those whose total SALT was already under $10,000
  • Low-to-moderate income filers who benefit more from standard deduction

New Senior Deduction

Taxpayers age 65 and older receive a significant new benefit:

  • Additional deduction: $6,000 on top of the standard deduction
  • Single filer total: $21,450 combined standard deduction
  • Married (both 65+): $42,900 combined standard deduction

Income Phase-Out

The senior deduction phases out at higher income levels:

  • Single filers: Phase-out begins at $75,000 modified AGI
  • Married filing jointly: Phase-out begins at $150,000 modified AGI
  • Complete phase-out: At significantly higher levels

Seniors below these thresholds receive the full benefit, providing meaningful tax relief for those on fixed incomes.

Car Loan Interest Deduction

In a surprise addition, the One Big Beautiful Bill created a new deduction for automobile loan interest:

  • Deduction limit: Up to $10,000 in car loan interest annually
  • Vehicle requirement: Must be a new vehicle with final assembly in the United States
  • Loan requirement: Must be a purchase loan (not lease payments)

How It Works

If you purchased a new U.S.-assembled vehicle with financing in 2025 and paid interest on that loan, you can deduct that interest up to $10,000. For a typical new car loan of $35,000 at 6% interest, first-year interest of approximately $2,000 becomes deductible.

Qualifying Vehicles

The "final assembly in the United States" requirement applies. Most vehicles from:

  • Ford, GM, and Stellantis plants
  • Toyota, Honda, and Nissan U.S. facilities
  • Tesla's Texas and California factories
  • BMW, Mercedes, and other foreign brands with U.S. plants

Check your vehicle's window sticker or VIN decoder to confirm U.S. assembly.

Other Notable Changes

Several other provisions affect 2025 returns:

Tax Bracket Adjustments

All tax brackets received inflation adjustments. The top brackets for 2025:

  • 37% bracket: Begins at $609,350 (single) / $731,200 (married)
  • 35% bracket: Begins at $243,725 (single) / $487,450 (married)
  • 32% bracket: Begins at $191,950 (single) / $383,900 (married)

Capital Gains Rates

Long-term capital gains rates remain at 0%, 15%, and 20% based on income thresholds, which have been adjusted for inflation.

Child Tax Credit

The child tax credit remains at $2,000 per qualifying child, with the refundable portion at $1,700.

Retirement Contributions

For 2025 contributions (which you can still make until April 15, 2026 for IRAs):

  • 401(k) limit: $23,500 (plus $7,500 catch-up for 50+)
  • IRA limit: $7,000 (plus $1,000 catch-up for 50+)
  • Enhanced catch-up: Ages 60-63 can contribute $11,250 extra to 401(k)

Filing Strategies for 2026

Given the changes, consider these strategies:

Reassess Itemizing vs. Standard Deduction

With the higher SALT cap, taxpayers who previously couldn't itemize should recalculate. If your combined SALT, mortgage interest, and charitable contributions exceed your standard deduction, itemizing now makes sense.

Gather Car Loan Documentation

If you bought a qualifying vehicle, request your Form 1098 from your auto lender showing interest paid. Keep documentation of U.S. assembly.

Seniors: Verify Age Documentation

To claim the senior deduction, ensure your date of birth is correctly recorded with the IRS. The deduction applies if you turned 65 any time during 2025.

Check Withholding for 2026

If these changes significantly affect your tax situation, adjust your W-4 withholding to avoid large refunds or underpayment penalties next year.

Filing Timeline Reminders

Key dates for the 2026 tax season:

  • January 26: IRS began accepting returns
  • January 31: Employers must send W-2s; businesses must send 1099s
  • April 15: Filing deadline (unless extended)
  • April 15: Last day for 2025 IRA contributions
  • October 15: Extended filing deadline

When to Seek Professional Help

Consider professional tax preparation if:

  • Your situation changed significantly in 2025 (home purchase, marriage, new business)
  • You're unsure whether to itemize under new SALT rules
  • You have complex investment income or cryptocurrency transactions
  • You're a senior evaluating the new deduction phase-outs
  • You purchased a car and want to maximize the interest deduction

The Bottom Line

Tax season 2026 brings meaningful changes that could impact your refund or tax bill. The quadrupled SALT cap, new senior deduction, and car loan interest deduction represent real opportunities for tax savings—but only if you understand and claim them.

Take time to review how these changes affect your specific situation before filing. Whether you use tax software, work with a professional, or file manually, understanding the One Big Beautiful Bill's provisions ensures you don't leave money on the table.

The deadline is April 15. The earlier you file, the sooner you'll receive any refund—and the more time you'll have to address any complications that arise. Tax season 2026 may be more complex than usual, but the potential benefits make careful preparation worthwhile.