The first tax season under Trump’s One Big Beautiful Bill Act is approaching, bringing several updates that could lead to larger refunds for many filers. The most notable change is the increase in the standard deduction, which directly impacts millions of taxpayers.
For single filers, the standard deduction rises to $15,750 from $15,000, while married couples filing jointly see it increase to $31,500 from $30,000. Experts say this boost can result in hundreds of dollars in additional refunds. The increase is significant because it benefits nearly all taxpayers regardless of other deductions.
SALT deduction cap expansion
The bill also temporarily raises the state and local tax, or SALT, deduction cap to $40,000, up from $10,000, before it returns to the lower limit in 2029. This change primarily helps homeowners in high-tax states, including New York, Florida, and California.
Single filers can claim the full amount, but married couples share the $40,000 cap, meaning the standard deduction may still be more beneficial in some cases. Middle- and upper-middle-income families in suburban areas with high property taxes are most likely to gain, while the benefit is smaller for those with lower tax obligations. The SALT deduction phases out for incomes above $500,000 and returns to $10,000 for those making at least $600,000.
No taxes on tips and overtime
Service workers and hourly employees can now deduct tip income and overtime pay up to $12,500 annually, or $25,000 for married couples. Occupations covered include hospitality, food and beverage, transportation, delivery, and home services. Income caps apply, but the rule is designed to ease the tax burden for lower- and middle-income workers. The IRS expanded the definition of tipped workers after the bill passed, widening the group eligible for these deductions.
Senior bonus deduction and family tax benefits
Taxpayers over age 65 receive an additional $6,000 standard deduction, which significantly lowers or eliminates federal tax liability for many retirees. Most seniors receiving Social Security will owe little to no federal tax on these benefits as a result of the new legislation.
Families also see enhanced benefits. The child tax credit increases permanently to $2,200 per child. Parents can open tax-advantaged accounts for children under 18, called Trump Accounts, which receive a $1,000 federal grant for children born between 2025 and 2028.
Charitable contributions, auto loans, and tariff dividends
The bill allows taxpayers to deduct up to $10,000 in auto loan interest on qualifying vehicles. Starting in 2026, an above-the-line deduction of $2,000 for charitable contributions will be available even to those who do not itemize. High-income donors face stricter rules, making large donations advantageous before the new thresholds take effect.
Another proposal under consideration is a $2,000 tariff dividend check for most Americans, though funding remains uncertain. Legal challenges around tariff revenue could affect distribution, and some lawmakers worry the payments might impact inflation.
The One Big Beautiful Bill brings a range of tax changes designed to benefit multiple groups, from seniors and families to service and hourly workers. Higher standard deductions, expanded SALT limits, and new allowances for tips, overtime, and charitable contributions all aim to increase refunds and reduce tax liability. While some provisions benefit upper-middle-income earners more, others directly aid lower-income and retired Americans, making this a transformative tax season for many across the country.