Americans may be able to save more money on taxes due to the One Big Beautiful Bill Act (OBBBA) introduced by Donald Trump. The law offers several new tax deductions that can lower taxable income and increase refunds. Most benefits focus on workers who earn tips, overtime pay, seniors, vehicle owners, and homeowners.
Tip income is no longer taxed under the new law. Eligible workers can deduct up to $25,000 of tip income from their taxable income through 2028. Married taxpayers who file separate tax returns cannot claim this deduction.
Overtime pay also gets a tax break. Qualified overtime earnings are exempt from tax under the OBBBA. Single filers, heads of household, and qualifying surviving spouses can deduct up to $12,500 of overtime income. Married couples filing jointly can deduct up to $25,000 in overtime income.
A new 'above-the-line' deduction is also available. Single taxpayers can claim a $1,000 deduction, while married couples filing jointly can claim a $2,000 deduction. Car buyers can deduct up to $10,000 in interest paid on qualified loans for new personal-use vehicles.
Americans aged 65 and older can deduct an extra $6,000 from their taxable income. Married couples where both spouses qualify can each claim the $6,000 deduction. This means some married seniors could deduct a total of $12,000.
However, the deductions are not available in full to everyone. Benefits start to phase out once taxpayers cross certain income limits.
A survey by Talker Research found that many Americans start planning how to use their tax refund about six months before receiving it. The survey included 2,000 U.S. taxpayers, and around 79% said they expect to receive some kind of tax refund this year.
Most people said they plan to use the money for essential expenses. About 77% said they would spend their refund on necessities. Around 52% said they would use their refund to pay bills such as rent, while 44% planned to spend it on groceries and other essential items.
The average taxpayer hopes to receive around $1,700 as a refund this year. However, people have mixed expectations for this year's refunds, with 22% believing they will receive a larger refund than last year, and 26% expecting to receive less money.
