3 IRS Changes That Could Affect Your Tax Refund This Year
There are a few important annual tasks that come with the start of each new year, not the least of which is reviewing your finances and beginning the steps to file your taxes. But whether you’re enlisting the help of a professional or going it on your own, there are a few key elements that are significantly different than last year—including some that could play a part in how much you see back.
That’s why, before you get ready to send off everything to the Internal Revenue Service (IRS), you might want to brush up on the updated rules, regulations, and amounts. Read on for the IRS changes that could affect your 2025 tax year refund.
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1. There are three new rules about deductions.
As part of the One, Big, Beautiful Bill Act (OBBBA) that was passed in July, three new rules on deductions are in play for 2026.
Seniors
One major difference is a deduction for seniors, which will be in effect for this tax season, covering 2025. From now through 2028, people who are 65 and older can claim an extra $6,000 (or $12,000 for married couples filing jointly), per the IRS. However, this benefit phases out for anyone who earns an adjusted gross income over $75,000, or $150,000 for couples filing.
Workers who earn tips
Some others pertain to those in the workforce, including a change that removes taxes on tips for employees. Beginning with tax season 2025, workers can deduct a maximum of $25,000 per year on “qualified tips,” which includes both cash and charged gratuities as well as shared or pooled tips. This option phases out for anyone who takes in an adjusted gross income of more than $150,000 (or $300,000 for joint filings).
Workers who earn overtime
There’s also a change when it comes to taxes on overtime pay. As of the 2025 tax year, workers can write off up to $12,500 per year (or $25,000 for joint filers). However, just like tips, this option also phases out for anyone making an adjusted gross income of more than $150,000 (or $300,000 for filing couples).
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2. Your refund might be bigger this year overall.
Arguably, the only good surprise when it comes to taxes is finding out that you’re getting more back than originally expected. This year, that may be the case for many individuals because when the OBBBA was signed in July with some significant tax cuts, many companies didn’t readjust withholdings on paychecks to reflect the difference, according to the Tax Foundation.
This will create a one-time windfall for many taxpayers with the next refund as the IRS compensates for the extra money withheld for the second half of 2025. But just how much can you expect? According to calculations from the Tax Foundation, the average refund could go up from $3,052 in tax year 2024 to $3,800 for tax year 2025.
3. The way you file your taxes could be different.
Over the past few years, there has been plenty of excitement surrounding the launch of the IRS Direct File program. As the name suggests, the service allowed taxpayers in 25 states to directly file with the tax agency instead of through intermediaries and provided a way to file for free.
However, the fledgling program has already been benched. The OBBBA officially suspended IRS Direct File, with Republican officials previously calling it “wasteful,” per Investopedia. This means that anyone who previously used the program might see a delay in receiving their refund as they search for new filing options and restart the process.
The change comes despite overwhelming public support for the program, with roughly 75 percent of taxpayers saying they were interested in using it and an overwhelmingly positive experience reported by those who used it during the 2025 tax filing season, according to a survey conducted by the Urban Institute.