In a significant shift for taxpayers, President Donald Trump’s “One Big Beautiful Bill Act,” enacted in July, aims to increase average tax refunds for the 2025 tax season. According to the Tax Foundation, a nonpartisan think tank, taxpayers could see refunds ranging from $300 to $1,000 more than in the previous year when they file their taxes in early 2026.
This uptick in refunds largely stems from the act’s provisions, which eliminate taxes on tips, overtime pay, and auto loan interest, while also expanding deductions for state and local taxes, parents, and seniors aged 65 and older. However, the new rules are complex, filled with various exceptions. A new Schedule 1-A form, which will need to be filled out by all taxpayers, is required to claim these benefits, although it is not currently available.
While many taxpayers stand to benefit from a larger refund, the act’s provisions could also lead to increased national deficit projections. The Congressional Budget Office has indicated that the tax breaks may exacerbate budgetary concerns over the next decade. The act, passed by a Republican-controlled Congress, has been criticized for disproportionately benefiting large corporations and wealthy individuals, all while slashing health care access for low-income and senior citizens. In Oregon, significant tax revenue losses are anticipated, as the state typically aligns its tax policies with federal cuts.
Important considerations are emerging for taxpayers in preparation for filing 2025 taxes. The IRS has yet to announce the official start date for the tax filing season, but Oregon is expected to accept state tax returns on the same day as the federal government. Last year’s start date was January 27. Furthermore, taxpayers will face a transition away from paper checks—refunds will predominantly be issued via direct deposit. Therefore, having a bank account and the correct routing information is essential to avoid delays.
For 2025, the standard deduction is set to rise by $750 for single filers and married individuals filing separately, totaling $15,750, and by $1,500 for married couples filing jointly, bringing their deduction to $31,500. Additionally, the act introduces significant tax breaks: single filers can exclude taxes on tips up to $25,000, while joint filers can deduct up to $300,000. Overtime income exemptions allow single filers to avoid taxes on up to $12,500 and joint filers on up to $25,000. Taxpayers purchasing new vehicles can also deduct up to $10,000 in auto loan interest, provided they meet specific income qualifications.
The law also permits a much larger deduction for state and local taxes (SALT), increasing to $40,000 from the previous cap of $10,000, available to taxpayers with incomes under $500,000 per year. This change is particularly advantageous for wealthier taxpayers who typically face higher state and local tax burdens. The Child Tax Credit will increase by $200, making it $2,200 per child, while seniors will benefit from a new additional deduction of $6,000 for single filers and $12,000 for married couples, phasing out at higher income thresholds.
Additionally, Oregon taxpayers will receive the fourth-largest kicker refund in state history, designed to return excess state revenue to citizens, but this will only occur after they file their 2025 state taxes and have submitted a 2024 state tax return. Those wishing to determine the amount owed from this kicker can find the necessary tools on the Oregon Department of Revenue’s website.
As taxpayers brace for changes in the upcoming tax season, staying informed about new regulations and filing requirements will be crucial in ensuring they take full advantage of the benefits afforded under the new legislation.
