Many taxpayers will be in for a pleasant surprise when they prepare their federal income tax returns for 2025. Last July’s big budget bill made a number of changes to the tax code. The five biggest include an increase in the standard deduction, a new deduction for taxpayers 65 and older, significant deductions for cash tips and overtime pay, an interest deduction on new vehicle loans and increased limit on the deduction for state and local taxes.

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The foregoing changes for 2025 were included in the budget bill (dubbed "One Big Beautiful Bill") that was signed into law on July 4th.

Higher Standard Deduction

The first involves the standard deduction. In addition to the inflation adjustment that’s made every year, the budget bill added an extra 5 percent increase. That me

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