WASHINGTON, Jan 25, 2026, 07:16 EST
- The IRS will start accepting 2025 federal tax returns on Jan. 26, with the filing deadline set for April 15.
- The new Schedule 1-A now includes deductions for tips, overtime, car-loan interest, and a senior bonus.
- This season, IRS Direct File won’t be an option; free filing is still possible via IRS Free File and other programs.
U.S. taxpayers can begin submitting their 2025 federal income tax returns starting Monday as the IRS kicks off a filing season marked by updated tax laws and revamped forms. “The Internal Revenue Service is ready to help taxpayers meet their tax filing and payment obligations,” said IRS Chief Executive Officer Frank Bisignano. 1
The timing is crucial since this marks the first filing season under President Donald Trump’s 2025 tax overhaul, the One, Big, Beautiful Bill. The legislation introduced new deductions and revamped existing limits and credits. As a result, even households earning the same as last year could see a shift in their refund or tax bill once the new rules are applied. 2
This season, the IRS anticipates around 164 million individual returns, mostly filed electronically. It’s urging taxpayers to rely on online accounts and opt for direct deposit. This is a high-volume operation.
The standard deduction, a fixed sum taxpayers can deduct instead of itemizing, is up for 2025 returns. It’s set at $15,750 for singles, $31,500 for married couples filing jointly, and $23,625 for heads of household. Meanwhile, the SALT deduction cap — the limit on state and local tax breaks — increased to $40,000 for 2025 returns. That boost, however, is set to expire after 2029, according to Kiplinger.
The law also raised the maximum child tax credit to $2,200 per qualifying child under 17 for 2025, though income limits apply, Kiplinger reported. That’s the headline figure, but eligibility depends on factors such as filing status and income.
A new Schedule 1-A, which supplements the 1040 form, introduces deductions for tips, overtime, car-loan interest, and a fresh senior deduction. According to the Washington Post, workers in certain roles can now deduct up to $25,000 in tips. Some filers may also claim qualifying overtime pay deductions—up to $12,500 for individuals and $25,000 for joint returns. 3
Auto buyers gained a fresh, targeted tax break. For 2025 loans, certain taxpayers may deduct up to $10,000 of interest on a car loan. However, the vehicle must be assembled in the U.S., and the deduction phases out for higher earners, according to the Washington Post.
For taxpayers aged 65 and up, the law introduced a $6,000 “senior bonus” deduction. This benefit phases out depending on modified adjusted gross income (MAGI), which begins with adjusted gross income and adds back specific items. According to Kiplinger, the deduction applies whether filers claim the standard deduction or itemize.
Online sellers and gig workers should brace for a change. Payment platforms are still required to send Form 1099-K, which reports payment-card and third-party network transactions. However, the federal threshold has snapped back to over $20,000 and more than 200 transactions, Kiplinger reported, ditching the much-debated $600 limit.
Small-business owners regained a familiar tax advantage. Kiplinger reports that 100% bonus depreciation, or full expensing, kicks in again for qualifying business equipment placed in service after Jan. 19, 2025—a cutoff that matters more than the purchase or payment date.
The end of IRS Direct File throws a new curveball into tax season. Without the IRS-run free filing option this year, more taxpayers will probably turn to private software and storefront services. Big players like Intuit’s TurboTax and H&R Block are expected to see increased use, alongside volunteer programs and IRS Free File alternatives mentioned by Kiplinger.
But the new breaks come tangled in paperwork and familiar pitfalls. Many deductions phase out as incomes rise, demand precise documentation, or depend on employer reporting. The IRS is revamping its systems and forms, cautioning taxpayers to brace for delays if their returns draw extra scrutiny, Kiplinger reported.
The IRS is advising taxpayers to gather their records now — W-2s, different 1099 forms, and proof of digital asset transactions — and to opt for direct deposit. This comes as the agency moves away from paper refund checks amid its payments modernization effort. 4
