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**New Tax Rules Bring Potential for Larger Refunds in 2026**
As tax filing season is in full swing, many Americans may be in for a pleasant surprise this year, thanks to the implementation of new tax rules that could lead to larger refunds. The changes, brought about by Trump’s 2025 One Big Beautiful Bill legislation, aim to provide relief and benefits to taxpayers across various demographics.
One of the significant changes affecting tax filers this year is the exemption of overtime hours from taxation. The newly signed legislation allows for a deduction of up to $12,500 of qualifying overtime wages, resulting in an average tax cut of $1,400 per individual. This provision is set to remain in effect from this year through 2028.
Another notable adjustment is the increase in the Child Tax Credit (CTC) from $2,000 to $2,200 per child. This change is expected to benefit families with children under 17 years old, with the credit beginning to phase out for higher-income households.
Furthermore, individuals aged 65 and above are set to receive a new $6,000 Senior Deduction ($12,000 for married couples filing jointly) for the years 2025 to 2028, subject to income limits. This deduction aims to provide additional financial relief to older taxpayers.
In a move to support workers who rely on tips, such as servers and drivers, tips will not be taxed this year, with a deduction of up to $25,000 from taxable income. However, there are income limitations for this benefit, with the deduction scheduled to expire after 2028.
Additionally, changes to the standard deduction have been implemented, with single taxpayers eligible for a $15,750 deduction, joint filers for $31,500, and heads of households for $23,625. These adjustments represent a 7.9% increase in standard deductions compared to the previous year.
Moreover, the State and Local Tax (SALT) deduction cap has been temporarily raised from $10,000 to $40,000 for the 2025 tax year. While this change may significantly benefit high-tax states, most taxpayers may not see a substantial impact unless they itemize deductions.
Overall, these new tax rules have the potential to result in significant refunds for many Americans, with experts predicting an additional $1,000 or more in refunds for eligible individuals. The total impact of these changes could amount to around $90 billion in increased tax returns, providing much-needed financial relief to taxpayers during this filing season.
As taxpayers navigate these new regulations, it is essential to consult with tax professionals or utilize reputable resources to ensure compliance and maximize potential refunds under the revised tax laws.
References:
– [Fast Company](https://www.fastcompany.com/91493500/new-tax-rules-are-in-effect-this-season-and-many-filers-dont-know-about-them)
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