How Trump’s ‘One Big Beautiful Bill’ Could Change How You File Taxes This Year

It’s been over half a year since President Donald Trump signed into law the massive spending plan known as the “One Big Beautiful Bill.” And families are still grappling with the full impact of this legislation, which has brought major changes to the nation’s health care sector, immigration enforcement and food assistance benefits.

The law also overhauls the federal tax system, leading the White House to claim that this year will be “the biggest tax refund season ever,” with average refunds increasing by at least $1,000 from the previous year.

But some taxpayers are already sharing different experiences online when it comes to their refunds, noting that they are actually smaller this year.

OBBB has expanded some existing rebates, like the Child Tax Credit, and created new ones, like a $25,000 deduction on income made from tips. But there are limits on how much these credits can actually reduce what you owe the IRS.

And other filers — specifically immigrant families that file with an Individual Taxpayer Identification Number — are now blocked from receiving many existing credits, potentially cutting their refunds by thousands of dollars.

To understand who’s able to claim some of the latest federal credits, KQED spoke to tax professionals across California about what taxpayers should know — and some of the restrictions that could impact how much you ultimately end up receiving in your refund.

No taxes on tips (to a point)

If you’re a waiter, bartender, hairstylist or working in another profession in which you make tips along with your regular wages, you can now deduct up to $25,000 from tips you made.

What this means: When you’re calculating your total income, you can subtract up to $25,000 from the full amount of tips you received in 2025.

For example, if you earned $40,000 in wages and made $30,000 in tips, you can deduct $25,000 from tips, giving you a total income of $45,000 (that is, your wages plus $5,000 in tips). If you earned $40,000 in wages and $10,000 in tips, you can deduct tips entirely — as that tip amount is smaller than $25,000 — and only list $40,000 as your total income.

Don’t remember how much you made in tips last year? Your employer should have listed that amount in your W-2 form, usually in box 14, said Minnie Sage, program director of San Francisco-based Tax-Aid. “The best thing to do when you’re heading to file is to bring your W-2,” she added.

If you made additional tips besides the amount reported on your W-2, let your tax preparer know, recommended Lindsay Rojas, director of free tax help at United Way Bay Area. “Some workers keep a log of all their tips,” she said, “and if they have one, they should bring that with them.”

Keep in mind that this deduction only applies to what the IRS calls “qualified tips,” which are those customers give directly, or which come from a tip pool organized by workers. If a business charges customers an extra fee for services — say a service charge at a restaurant for large parties — and then distributes that amount to employees, that is not a qualified tip, given the customer was required to pay that charge.

Do ITIN holders qualify? No: Taxpayers need to file with a Social Security number to be eligible for this credit.

No taxes on some overtime payments

You can now deduct up to $12,500 from how much you made in overtime when calculating your total income.

In most cases, federal law requires that hourly wage employees be paid at least 1.5 times their regular pay for each extra hour worked. Overtime is any hour worked over 40 in one week.

If you’re paid $20 an hour and your boss asks you to work 48 hours in one week, you should be paid at least $30 an hour for those additional eight hours.

The extra $10 you made each hour is what can be deducted when calculating your total income. In this example, if you only worked eight hours of overtime throughout 2025, you could deduct $80 from your yearly total. The maximum deduction available for overtime is $12,500.

While some employers will mark your extra overtime income on box 14 of your W-2, you can also bring your last pay stub from 2025, said Rojas from United Way Bay Area.

“The last pay stub usually states the overtime amount that they worked,” she explained. “From there, the tax preparer can see what amount would qualify.”

Do ITIN holders qualify? No. Taxpayers need to file with a Social Security number to be eligible for this credit.

A bigger Child Tax Credit — with restrictions

Parents and guardians will now receive a $2,200 credit for each child who is their dependent — $200 more than what was available for the 2024 tax year. To be eligible for this rebate, a child must have been younger than 17 before the end of 2025.

However, only $1,700 of the $2,200 credit is refundable — meaning that while the total $2,200 can be used to pay off what you owe the IRS, you can only get up to $1,700 per child as part of your actual refund. If you owe $1,000 to the IRS and have one eligible child, only $700 will go to your refund check.

“At the end of the day, there are credits that are not refundable,” said Sage from Tax-Aid. “You may get the credit to offset your tax liability, but you don’t get the full $2,200 back.”

Do ITIN holders qualify? No: Both the filer and any child under 17 claimed as a dependent need to have a Social Security number to be eligible for this credit. However, families filing with an ITIN are still eligible for California’s own Young Child Tax Credit if they have kids under 6 years old, as the state does not require filers to provide a Social Security number to receive this rebate.

Larger deductions for seniors

Filers who are 65 or older can claim a $6,000 deduction for taxable income from 2025, on top of whatever standard deduction they already qualify for. If someone is no longer working, this deduction can apply to money they receive from pension funds or gambling winnings — and even some Social Security benefits if their total annual income exceeds certain thresholds.

For couples who are married and filing jointly, the deduction maximum doubles to $12,000.

This credit is not refundable, meaning it won’t contribute to someone’s refund check, Rojas said. “If there’s no taxes owed, then it won’t really affect them,” she said.

But “if they have other taxable income there, that will potentially bring down what they may owe for taxes,” Rojas said.

Do ITIN holders qualify? No. Taxpayers need to file with a Social Security number to be eligible for this credit. But many seniors living in California are still eligible for the state’s Earned Income Tax Credit, as the state does not require filers to provide a Social Security Number for this rebate.

Deductions for car loan interest payments

If you purchased a car in 2025, you can deduct the interest paid on any loan you took out to pay for that vehicle. The maximum deduction available is $10,000. If you’re leasing your car, this deduction does not apply.

In addition to only being for cars that are for personal use, there’s another requirement: Your vehicle’s “last assembly has to be completed in the United States,” Rojas said.

Acknowledging that it may be confusing for some folks to figure out where their car was last assembled, she recommended that tax filers “should bring whatever documentation they received at the time of the purchase” to their tax preparation appointment.

The IRS requires that filers also include their car’s vehicle identification number, a 17-character number marked “VIN” that you can usually find on the interior of the driver’s door or on the closest dashboard.

Do ITIN holders qualify? Potentially, as the IRS does not require having a Social Security number to claim this credit.

No e-file and longer wait times to receive refunds without direct deposit

Last November, the IRS announced that it would end its Direct File Tool, which allowed taxpayers to file directly for free without needing the help of a tax professional or an online tax service.

You can still find free tax help from a community organization certified by the IRS Volunteer Income Tax Assistance program. Many VITA sites offer assistance in Spanish, Cantonese, Tagalog, Vietnamese and other languages, and some also offer unscheduled walk-in appointments. Find the VITA site closest to you using United Way Bay Area’s interactive map.

The IRS is also strongly encouraging filers to sign up for direct deposit to receive their refund. Taxpayers can still request to receive their refund in the mail as a check, but that may end up taking a lot longer, Sage said.

“We’re really encouraging people who don’t have a bank account to sign up for one,” she said, “so they can get direct deposit and access that money quicker.”