Are you ready to discover if you're eligible for the new tax breaks? While the average U.S. taxpayer can expect a refund increase of $300 to $1,000 this tax season, not everyone will benefit from the most talked-about deductions. Let's dive into the details and see who's eligible for these new breaks, and who might miss out. But here's where it gets controversial... Are you ready to learn more?
The 'No Tax on Tips' break, for instance, is expected to benefit only about 2.5% of workers, according to The Budget Lab at Yale. This means that only around 3% of U.S. households will avoid paying tax on tips, with the average household saving about $40. This benefit applies to food servers, bartenders, hairdressers, Uber drivers, and tour guides, but there are restrictions. Tipped workers can claim no more than $25,000 in tips for the year, and the benefit starts phasing out for single filers with modified adjusted gross incomes over $150,000 per year, and $300,000 for joint filers.
Similarly, the 'No Tax on Overtime' break is expected to benefit about 9% of U.S. workers, according to The Tax Policy Center. However, this benefit excludes salaried employees and hourly employees who never get a chance to work more than 40 hours per week. The IRS is allowing up to $12,500 in overtime to be deducted for single filers, or $25,000 for joint filers, but taxpayers still must pay taxes on the portion of their overtime that’s equivalent to their normal hourly wage.
The 'No Tax on Car Loan Interest' break is also likely to exclude most people with car loans, as it doesn’t apply to the approximately three out of four cars sold that are used cars. This new break applies only to taxpayers who bought a new car in 2025, and in future tax years, through 2028. Taxpayers who do qualify for this break can deduct up to $10,000 per year in interest.
On the other hand, about half of taxpayers 65 and older will benefit from a new $6,000 deduction tailored just for their older age group. The standard deduction will also rise by $750 — to $15,750 — for single filers or married people filing separately, and by $1,500 for married couples filing jointly, to $31,500. The Child Tax Credit will also affect a wide cross-section of U.S. taxpayers, with the credit growing by $200 year over year, to $2,200 per child for the 2025 tax year.
So, who's eligible for these new tax breaks? To claim most of these deductions, you must fill out the new Schedule 1-A form, which taxpayers must complete to claim any four of the new tax breaks: 'No tax on tips,' 'No tax on overtime,' the $6,000 deduction for elderly taxpayers, and 'No tax on car loan interest.' Are you eligible? Do you agree or disagree with these new tax breaks? Share your thoughts in the comments below!
