Many U.S. taxpayers could get bigger tax refunds Application seasonthanks to expanded deductions introduced in last year’s sweeping tax legislation. Tax professionals say the changes could significantly reduce the taxable income of some workers, seniors and buyers, potentially increasing refunds.
The updated law expands tax breaks for several categories of income earners. according to IRSearly filing data already points to an upward trend in refunds this quarter.
Mark Steber of Jackson-Hewitt Tax Services told KGW the reforms are the biggest tax shifts he’s seen in decades. “We’re not just expecting more refunds, we’re expecting more refunds,” he said.
Tip income deduction
Service industry workers will benefit from new deductions from qualified tip income. Eligible taxpayers can deduct up to $25,000 from reported tips, reducing taxable income and potentially increasing their refund.
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The change could have a meaningful impact on bartenders, servers and hotel workers whose income relies heavily on tips.
Tax deduction for overtime wages
Employees who work overtime may also be eligible for benefits. The law allows eligible workers to deduct up to $12,500 of overtime earnings, providing additional savings for workers who work significant amounts of overtime in a year.
Incentives related to U.S.-assembled vehicles
taxpayer Vehicles purchased in 2025 that were assembled in the United States may be eligible for an interest deduction. Even without itemized deductions, buyers with a qualified auto loan can deduct up to $10,000 in loan interest, Steber explains.
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Additional deduction for seniors
Americans 65 and older can claim an additional $6,000 in deductions, up to $12,000 if married couples file jointly. The provision is intended to offset the tax burden faced by many seniors, including taxes on Social Security benefits.
Early filing data from the Internal Revenue Service (IRS) shows that the average refund amount is about 14% higher than this time last year, indicating that the expanded deductions have affected returns.
Tax professionals recommend carefully reviewing qualifications or consulting with a tax expert to ensure all applicable deductions are claimed.
