With the arrival of 2026, many Americans can expect more money in their pockets due to changes ushered in by the One Big Beautiful Bill Act, signed into law by President Trump on July 4, 2025.
“A lot of new things go into effect,” said Benjamin Akins, JD, LLM, professor of legal studies and taxation at Georgia Gwinnett College (GGC). “Essentially, many American taxpayers will pay less than they did in 2024 and many will receive larger refunds.”
Most taxpayers, Akins explained, take the standard deduction. For the 2024 tax year, that amount was $14,600 for individuals filing single, and $29,200 for those married filing jointly.
“For 2025 taxes, those deductions increase to $15,750 for single filers and $31,500 for married couples filing jointly,” Akins said.
Taxpayers aged 65 and older receive additional relief. According to Akins, they may add an extra $6,000 per person on top of the standard deduction.
Families will see benefits in several major areas.
“The child tax credit has increased by 10% per child and will continue to rise with inflation,” Akins said. “The adoption credit is also more generous, allowing families to claim part of the credit as refundable.”
Another significant change affects 529 college savings plans.
“The restrictions on using 529 funds have been relaxed,” Akins said. “Previously, these plans were mainly for college degrees programs. Now, the funds can also be used for trade schools and professional certification programs.”
U.S. citizens born between Jan. 1, 2025, and Dec. 31, 2028, who have a valid Social Security number, are also eligible for a new federal benefit: a one-time $1,000 deposit into a Trump account.
“This is a federal savings account for the child,” Akins said. “Parents, family members and even employers can contribute up to $5,000 annually.” The accounts can be opened and funded beginning July 4, 2026.
Akins noted that this account is separate from the child tax credit.
“The child tax credit is $2,200 and directly reduces your income tax bill,” he said.
Tax relief extends beyond families to those who itemize deductions.
“Since 2018, taxpayers were limited to itemizing up to $10,000 for state and local taxes, such as property and income taxes,” Akins said. “For 2025, that cap has increased to $40,000.”
There are also incentives for consumers who purchased vehicles.
“If you bought a U.S.-assembled vehicle in 2025, you may qualify for an additional $10,000 deduction on any auto loan interest you pay,” Akins said.
One of the most widely discussed changes is the elimination of taxes on tips.
“This applies to traditional service industry jobs,” Akins said. “Eligible workers can deduct up to $25,000 of tips from their gross income.”
Employees who work overtime can also benefit, with deductions of up to $12,500 per taxpayer.
Not all areas saw expanded benefits. Charitable giving, Akins said, is more limited for a few taxpayers starting in 2026. This is due to a new 0.5% “AGI floor” that Congress added to the bill.
“For example, if your adjusted gross income is $100,000 and you donate $1,500 to charity, you can only deduct the amount above 0.5% of your income,” he said. “That means the first $500 of that donation would not be deductible.”
He noted this rule only applies to those who choose to itemize their deductions.
Overall, Akins described 2025 as a taxpayer-friendly year for most Americans.
“One thing people should revisit sooner rather than later is their employer withholding,” he said. “The goal is to keep more money in your paycheck throughout the year instead of receiving a large refund because too much was withheld.”