Here’s what you need to do to get a bigger tax refund in 2026, under new IRS rules

President Donald Trump’s “One Big Beautiful Bill Act” signed into law in July will net the average taxpayer a bigger refund for the 2025 tax season.

After filing taxes in early 2026, the average taxpayer may receive a refund that’s between $300 to $1,000 more than the previous year’s, according to the Tax Foundation, a nonpartisan think tank in Washington, D.C.

For many taxpayers, the bonus money may be a result of the new legislation calling for no taxes on tips, overtime or car loan interest — as well as greater deductions for state and local taxes paid, parents and people 65 and older.

But the rules are complicated and peppered with exceptions. And before you get any money, there’s one new thing you’ll definitely need to do: Fill out a new Schedule 1-A form, which isn’t available yet. (We’ll post a story about the form when it is).

While the average taxpayer will see a fatter refund, the tax breaks also will have repercussions for the national deficit, causing it to balloon over a decade, according to the Congressional Budget Office. The One Big Beautiful Bill Act, which was passed by the Republican-controlled Congress, also comes with enormous benefits for big business and the rich. Meanwhile, it slashes health care for poor and older Americans and cuts food aid to the Supplemental Nutrition Assistance Program, formerly known as food stamps.

Oregon also is expected to lose significant tax income because, in general, Oregon automatically copies the tax cuts the federal government offers.

That said, here’s what you need to know before you start filling out your 2025 taxes:

First day to file taxes: The IRS says opening day of the federal tax filing season will be Monday, Jan. 26. Oregon will start accepting state tax returns the same day the federal government does.

Phasing out paper checks: With few exceptions, you won’t get your money by paper check. So make sure you have a bank account and your account’s routing information so you can get your refund through direct deposit. If you don’t, you may experience delays in getting your money.

How much bigger will my federal refund be?: Last year, the average taxpayer received a refund of $3,052, according to the latest IRS figures available. This year, it could be $300 to $1,000 more because of any of the many new tax breaks that may apply to your individual situation.

Standard deduction: This is the set amount that taxpayers can deduct from their taxable income. The standard deduction for the 2025 tax year will rise by $750 — to $15,750 — for single filers or married people filing separately. It’ll increase by $1,500 for married couples filing jointly, to $31,500.

No taxes on tips: Waiters, bartenders or others who “customarily and regularly” receive tips can avoid paying taxes on up to $25,000 of them. This tax break is designated for single filers with modified adjusted gross incomes of less than $150,000 per year or joint filers at less than $300,000 per year. Make more than that and the deduction starts to phase out.

No taxes on overtime: Single filers can avoid paying taxes on up to $12,500 in overtime income, while joint filers can deduct up to $25,000 of their overtime pay. The deductions start phasing out for single filers with modified adjusted gross incomes of more than $150,000, or $300,000 for joint filers.

No taxes on auto loan interest: Taxpayers who bought a new car, minivan, van, SUV, pickup truck or motorcycle for personal use can deduct up to $10,000 in auto loan interest per year, if their modified adjusted gross incomes are less than $100,000 per year for single filers, or $200,000 for joint filers. To qualify, the car must have undergone final assembly in the U.S.

Deduct state and local taxes: The One Big Beautiful Bill Act will allow taxpayers a much larger SALT (State and Local Taxes) deduction — up to $40,000 instead of up to $10,000. That means a taxpayer who itemizes their deductions can avoid “double taxation” by preventing up to $40,000 of the income that they paid in state and local taxes, such as property and income tax, from being taxed federally.

This mostly benefits wealthier taxpayers because they are more likely to pay higher amounts of income tax and own property that accumulates hefty tax bills.

The $40,000 SALT deduction is available for people making less than $500,000 a year. Those making over that amount will receive a scaled-down, smaller deduction. About 90% of the people who take advantage of it make more than $100,000 a year.

Child Tax Credit: This tax credit increases by $200 year over year, to $2,200 per child for the 2025 tax year. It applies to single filers with annual incomes up to $200,000, or $400,000 for joint filers. Above those thresholds, parents may be able to claim a partial credit.

Source; The Oregonlive