The first tax season under President Trump’s One Big Beautiful Bill Act is fast approaching – and most filers can expect a slew of fresh and enlarged deductions that will result in bigger refund checks in the mail.
The tax-and-spending bill is expected to go down as the signature legislative achievement of Trump’s second term, extending his 2017 tax cuts and adding an estimated $4 trillion to the deficit. It also will save the average US taxpayer hundreds if not thousands of dollars, according to experts.
“These changes to the standard deduction, SALT cap and tax exemptions on tips, overtime and senior bonus mean most people will be paying less in taxes or getting a bigger refund in April,” Nathan Goldman, tax expert and professor at North Carolina State University, told The Post.
Higher standard deduction
Arguably the most significant tweak in the bill is an increase to the standard deduction, since this will affect the largest chunk of American taxpayers.
While standard deductions tick up every year, they saw two increases in 2025: once at the start of the year, and once with the passage of Trump’s One Big Beautiful Bill Act.
The bill increased the standard deduction for a single filer to $15,750, up from $15,000, and for a married couple to $31,500, up from $30,000.
“That’s an extra few hundred dollars that you’re getting back,” Goldman said. “That one’s huge because now we’re talking about a huge deduction that every single person is getting regardless of all your other activities.”
SALT deduction cap
Another major change in Trump’s tax-and-spending bill is the new cap to state and local tax, or SALT, deductions.
It quadruples the SALT deduction cap to $40,000, though this is temporary and will drop back down to $10,000 in 2029.
“Some of the biggest itemized deductions come down to what you pay in property taxes, and property taxes are very expensive in New York, Florida, California. Instead of only being able to itemize $10,000, they’re going to be able to itemize up to $40,000,” Goldman said.
But the new cap will benefit some more than others, according to EJ McMahon, a fellow at the Manhattan Institute for Policy Research.
Single filers can claim the full amount – but married couples who file jointly would share the $40,000 SALT deduction between both spouses.
Since the standard deduction is $31,500, it might be more beneficial in some cases for the married couple to continue taking that standard deduction.
But if they are already itemizing – for example, if they own a home – then the SALT cap could prove more optimal.
“The most likely beneficiaries will be a large [swath] of middle- and upper-middle-income families in the New York City suburbs of Long Island and the lower Hudson Valley, where a combination of local property taxes and state income tax can easily range from $20,000 to $25,000,” McMahon told The Post.
While the impact will not be as large for upstate homeowners, those in metro suburbs around Albany, Syracuse, Rochester and Buffalo will still benefit.
“Do your state and local taxes plus mortgage interest plus charitable contributions exceed $31,500? Then you benefit,” McMahon said. “The answer is more likely to be yes if you are a middle-class homeowner downstate.”
The full SALT deduction phases out for filers with gross income above $500,000, and reverts to $10,000 for incomes of at least $600,000.
No tax on tips and no tax on overtime
Service workers can now deduct up to $12,500 of tip income annually, and hourly workers can deduct up to $12,500 of overtime pay each year – or $25,000 in both cases if filing as a married couple.
“When the president was designing this bill, the intention was for everyone to get a tax cut, and I think generally speaking, that is what is going to happen, which I think you would expect from a tax bill that’s this large,” Alex Durante, senior economist at the Tax Foundation, a tax policy nonprofit, told The Post.
“It’s largely going to be the tipped workers, which I think the definition of what counts as a tipped worker itself was expanded by the IRS after the bill passed, so that could end up being a larger group than was anticipated,” he added.
The official list of approved occupations covers industries like hospitality, food and beverage, transportation and delivery and home services. There are also income caps on these deductions.
While the SALT cap will primarily help upper-middle-class filers, the new rules for tipped and overtime workers “are gonna have an impact on average [on] lower-income individuals,” Goldman said.
Senior bonus deduction
The bill adds an additional $6,000 standard deduction bonus for taxpayers over age 65, many of whom are retired.
“Seniors get an additional standard deduction that’s pretty large and effectively wipes out most of their tax liability,” Durante told The Post.
“There’s actually very few seniors that are even going to be paying taxes on their benefits as a result of this legislation.”
The White House said the vast majority of senior citizens – 88% of all seniors who receive Social Security – will pay no tax on those benefits, citing an analysis from the Council of Economic Advisers.
Auto loan interest deduction
The bill also allows eligible taxpayers to deduct up to $10,000 in auto loan interest on new qualifying vehicles for the first time.
Tax credits and Trump accounts for kids
As part of the bill, the child tax credit has been permanently hiked to $2,200 per child, up from $2,000.
Parents will also be able to open tax-advantaged investment accounts known as “Trump Accounts” for kids under 18 with Social Security numbers.
For US citizens born from 2025 through the end of 2028, the US Treasury will seed these accounts with a federal grant of $1,000 each.
Charitable contributions
Starting in 2026, taxpayers will have a $2,000, above-the-line charitable contribution deduction – meaning you can deduct $2,000 if you don’t itemize your taxes.
But the bill also added a floor, so itemized filers need to donate at least 0.5% of their adjusted gross income before they can start deducting anything.
“This is a particularly good year to be giving if you’re a higher-income individual because the rules are gonna be worse,” Goldman said.
“On the flip side, giving money to a charitable organization is going to get really good if you’re not one of these high-income individuals starting in 2026.”
For example, if you make $100,000 annually, don’t itemize your taxes and like to donate a little cash to your university each year, it might be better to hold off until next year when it can be deducted from your taxes, Goldman said.
For those earning more than $400,000 or $500,000, on the other hand, “giving money to charitable organizations is going to be worse next year,” he continued.
“That’s part of the reason we’re seeing a lot of really big donations to athletic departments lately,” Goldman said.
“They’re getting like seven, eight-figure, nine-figure donations to their athletic departments because these really rich donors are going to lose out on a couple million dollars in tax deductions starting next year.”
$2,000 tariff “dividend” checks
Another economic proposal from Trump is his $2,000 tariff “dividend” checks, which he has vowed to send to the majority of Americans by the 2026 midterms.
Revenue from a large batch of Trump’s tariffs is not enough to cover the roughly $600 billion cost of the checks – and those tariffs are currently in limbo, with the Supreme Court expected to rule on their legality next year.
If the tariffs are struck down, the government will be required to return the funds to those who paid it.
While it’s possible to fund the checks in other ways, money would have to be borrowed, Durante said.
And some GOP lawmakers have flagged concerns that the checks could reheat inflation, like the Biden administration’s stimulus checks in 2021.
“I just don’t really see them actually following through on this proposal,” Durante said.
