The NewsWorthy Special Edition: What's Changed This Tax Season
Feb 28, 2026
Andrew Lautz, Director of Tax Policy at the Bipartisan Policy Center, breaks down the major 2025 tax-law changes and who they help. He highlights new deductions, confusion over tip and overtime rules, the revamped child tax credit, and how IRS funding and staffing could affect refunds and services. He also discusses the fallout from Trump’s lawsuit and what Congress might do about IRS modernization.
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New Law Changed Major 2025 Tax Rules
- The One Big Beautiful Bill made many individual tax changes retroactive to Jan 1, 2025, affecting millions of filers.
- Key shifts include a larger standard deduction, bigger child tax credit, new deductions for tip and overtime income, and auto loan interest on new made-in-America vehicles.
Most Refunds May Be Noticeably Larger
- Average refunds are expected to rise by several hundred dollars, potentially from about $3,000 to north of $3,500.
- Some taxpayers claiming specific new deductions (like tips) could see tax cuts in the thousands.
Overtime Deduction Is Bigger And Tricky
- The overtime deduction is likely to have a bigger budgetary and taxpayer impact than the tips deduction but is more complex.
- It applies only to FLSA overtime and covers the half-bonus portion of time-and-a-half pay, not the full overtime pay.