New Tax Breaks, New Rules: What to Know Before You File
As tax filing season begins, you may have heard that many Americans can expect a larger tax refund this season.
But filing your return may feel very different this year. The new tax breaks are only part of the story. Last year’s One Big Beautiful Bill Act (OBBBA) introduced sweeping changes—from new forms and reporting requirements to fewer free filing options. The result? More opportunities to save money, paired with more complexity and room for error. Here’s what to know before you file.
1. New deductions could mean bigger savings—but also more complexity.
The OBBBA expanded the child tax credit to $2,200 and introduced several new above-the-line deductions that can be claimed in addition to the standard deduction (now $15,750 for single filers and $31,500 for married couples filing jointly). These deductions are claimed on a new Schedule 1-A, and many come with nuanced eligibility rules and calculations.
New deductions include:
Tip income: Up to $25,000 in qualifying tips
Overtime pay: Up to $12,500 of eligible overtime pay (the “half” in time-and-a-half)
Auto loan interest: Up to $10,000 in interest on 2025 auto loans for qualifying new U.S.-made vehicles
Seniors: An additional $6,000 deduction for taxpayers age 65 and older
As Erin Collins, the National Taxpayer Advocate, recently noted, these benefits come with “complex eligibility rules, income thresholds, and phaseouts that will be difficult for many taxpayers to understand and for the IRS to administer accurately.”
In practical terms, even taxpayers who don’t itemize may find their returns far less straightforward than in prior years. A tax professional can help determine which deductions apply, ensure calculations are done correctly, and reduce the risk of missing out—or triggering an IRS notice.
One additional change to note: the cap on state and local tax (SALT) deductions increased to $40,000 from $10,000, but this benefit only applies to those who itemize.
2. Fewer payment app tax forms doesn’t mean less taxable income.
The IRS has reinstated the previous reporting thresholds for payment apps like Venmo and PayPal. These platforms will now issue a Form 1099-K only if you received more than $20,000 in gross payments and had more than 200 transactions during the year. Plans to lower the threshold to $600 have been scrapped—for now.
However, this change affects reporting, not taxation. Any income you earned through payment apps—whether from freelancing, selling goods, or side gigs—must still be reported, even if no 1099-K is issued. Personal transactions, like splitting dinner or sending a gift, remain non-taxable.
This distinction trips up many taxpayers, and misreporting payment-app income is a common audit trigger. Having a firm review your income sources can help ensure everything is properly categorized and documented.
3. Crypto reporting just got more formal.
As digital assets move into the mainstream, the IRS is standardizing how transactions are reported. For the first time, brokers must issue Form 1099-DA for gains or losses on crypto, stablecoins, and other tokenized assets.
You’ll need to report transactions when you sell, exchange, or redeem digital assets—not when you simply buy or hold them. While these transactions were already taxable, reporting was largely self-directed in prior years. The new form is intended to reduce errors and underreporting.
Crypto activity can create complex tax situations, particularly when multiple wallets, exchanges, or transaction types are involved. Professional preparation can help reconcile records and avoid costly mistakes.
4. One fewer free filing option.
The IRS has suspended its Direct File pilot after limited adoption, leaving fewer free software-assisted filing options. Taxpayers with adjusted gross income under $89,000 can still use IRS Free File, and the IRS’s Fillable Forms remain available for those comfortable preparing returns on their own.
That said, fillable forms offer minimal guidance—no prompts, planning help, or error checks beyond basic math. For returns impacted by the OBBBA’s many changes, the margin for error is higher than ever.
The bottom line
This is not the year to simply “check the boxes.” The OBBBA made more than 100 changes to the tax code, many of which will remain in effect through 2028. While these updates create meaningful opportunities to reduce your tax bill, they also increase the risk of missed deductions, misreported income, and delayed refunds.
Working with a trusted tax firm can help you navigate the new rules, maximize available benefits, and file with confidence—so you can focus on what matters most, knowing your return was prepared accurately and strategically.
As always, if you have questions or would like assistance preparing your return, we encourage you to contact us. We’re happy to help.
