Tax season is underway. The One Big Beautiful Bill Act (OBBBA), enacted July 4, introduced significant changes for 2025, leading to larger 2025 tax refunds for many individual taxpayers.
Below, Jeffrey Plunkett, a professor of practice in accounting at Olin Business School at Washington University in St. Louis, answers common questions about these changes, how reductions in Internal Revenue System (IRS) staffing could impact the filing process and who needs an accountant.
What are the most notable changes taxpayers will see this year as a result of the One Big Beautiful Bill Act?
First, many taxpayers may see somewhat larger refunds when filing their 2025 returns because several changes were made retroactive to January 1, 2025, while IRS withholding tables were not updated for that year. As a result, employers generally continued withholding under pre-change rules, and most taxpayers did not affirmatively adjust their withholding elections. Consequently, many taxpayers’ withholding for last year may exceed actual tax liability by a larger amount than in prior years, with any excess refunded upon filing.
Perhaps most notable is what tax filers will not see: a significant increase in their 2026 tax liabilities. The 2017 Tax Cuts and Jobs Act (TCJA) enacted temporary individual tax cuts scheduled to expire at the end of 2025. which would have increased taxes for many taxpayers. The OBBBA prevented this scheduled sunset and made many TCJA provisions — including the lower marginal rate structure and higher standard deduction — permanent. As a result, many taxpayers will see their individual tax burden remain broadly similar to prior years, aside from incremental adjustments.
There are also new changes in certain areas. On the campaign trail, President Donald Trump vowed to eliminate taxes on Social Security income. That is not exactly what was enacted — likely in part due to budgetary implications. Instead, the legislation created an additional standard deduction of up to $6,000 for individuals age 65 or older with income below certain thresholds. This temporary provision, which expires in 2028, reduces taxable income and will lower or fully offset federal tax liability for many older taxpayers, including many Social Security recipients.
Another campaign initiative was eliminating federal tax on tips and overtime pay, though the enacted law is more limited. The OBBBA provides a deduction of up to $25,000 for qualified tip income and up to $12,500 ($25,000 joint) for qualified overtime income. Both deductions begin phasing out when income exceeds $150,000 for single taxpayers or $300,000 for joint filers.
Other changes include a permanent increase in the child tax credit and a new temporary deduction for interest on loans used to purchase qualified U.S.-assembled cars for eligible taxpayers.
Who will benefit the most from these changes?
Low- to middle-income taxpayers will likely benefit the most. Very low-income individuals often already incur little or no federal income tax liability. However, older taxpayers who previously paid tax on Social Security benefits may see that liability reduced, and middle-income individuals earning substantial tip income may experience lower overall tax burdens.
With a relatively higher standard deduction, who should itemize?
Taxpayers should claim whichever is greater — their itemized deductions or the standard deduction for their filing status. Beginning in 2018, standard deduction amounts increased significantly, in many cases nearly doubling, which led many taxpayers to stop itemizing. That dynamic largely remains today, and taxpayers who itemize typically have distinct financial profiles that push their deductible expenses above the standard deduction.
New this year, taxpayers claiming the standard deduction may also deduct cash charitable contributions — up to $1,000 for individuals or $2,000 for joint filers. Because charitable contributions were historically an itemized deduction, some observers believed the TCJA reduced overall giving. The new provision allows some charitable deductions even for those taking the standard deduction.
Will IRS staffing changes affect filing or refunds?
Over the past year, reporting has suggested the IRS workforce has declined significantly. I do not expect most taxpayers filing electronically to see material delays in return processing or refunds owed for 2025. Where staffing reductions may be felt is in resolving questions or notices related to a return, as back-and-forth communication could take longer than in prior years.
When should you hire an accountant?
People often associate tax planning with wealthy households but working with an accountant can help identify credits or deductions many taxpayers overlook. These changes may create opportunities that affect refund outcomes.
That said, even as an experienced tax practitioner, I use tax software personally. It is simple, cost-effective and facilitates electronic filing. Software packages such as TurboTax use plain language and guided questions, making compliance accessible for many taxpayers.
When tax situations become more complex — owning a small business, gig work, rental property or other departures from a straightforward W-2 situation — professional assistance may be worthwhile to ensure compliance and maximize available deductions.
