If you’ve been keeping an eye on tax news, you’ve probably heard the buzz: a major IRS update could boost your refund next year. Yep, you read that right. Uncle Sam is about to give some folks a little more breathing room, and if you know how to play it, your refund might look way healthier in 2026.
These updates include higher standard deductions, a bigger Child Tax Credit, expanded SALT deductions, and new perks for tipped and hourly workers. Add in the IRS’s annual inflation adjustments, and we’re looking at more ways to legally keep money in your pocket.
Major IRS Update Could Boost Your Refund Next Year
| Update/Benefit | Details | Who Benefits |
|---|---|---|
| Standard Deduction Increase | $15,000 (Single), $30,000 (Married), $22,500 (Head of Household) | All taxpayers |
| Child Tax Credit Boost | Raised to $2,200 per eligible child | Families with kids under 17 |
| SALT Deduction Cap | Temporary increase from $10,000 to $40,000 | High-tax state residents |
| Earned Income Tax Credit (EITC) | Up to $8,046 for families with 3+ kids | Low-to-moderate income families |
| Tip & Overtime Deduction | Deduct up to $25,000 (tips) and $12,500 (overtime) | Service & hourly workers |
| Small Business Relief | 20% QBI deduction & bonus depreciation | Self-employed, small biz owners |
The major IRS update for 2025 is a win for many Americans. Bigger deductions, stronger credits, and targeted relief mean taxpayers can breathe a little easier. Whether you’re a parent, a retiree, a tipped worker, or a small business owner, planning ahead could mean hundreds—or even thousands—more in your refund.
So don’t wait. Adjust your withholding, track your expenses, and stay informed. Uncle Sam might finally be giving you a break—but only if you know how to claim it.
Why This IRS Update Matters
Let’s face it—taxes usually feel like a chore. But here’s the kicker: refunds are basically the IRS giving you your money back. And with inflation hitting everything from eggs to gas, more money at tax time is a big deal.
Nearly 37% of Americans would struggle with a $400 emergency expense (Federal Reserve data). That’s why these changes aren’t just “policy shifts”—they’re lifelines for real families.
Breaking Down the Big Changes
1. Higher Standard Deduction
For 2025:
- Single/Married Filing Separately: $15,000
- Married Filing Jointly: $30,000
- Head of Household: $22,500
Example: Mary, a retiree filing single, won’t pay taxes on her first $15,000. Last year, it was only $14,600. That’s an extra $400 tax-free.
2. Child Tax Credit (CTC) Boost
- Jumps from $2,000 to $2,200 per child under 17.
Example: John and Lisa have 3 kids. That’s $600 more than last year, plus it directly lowers their tax bill—not just taxable income.
3. SALT Deduction Cap Expansion
- Cap increases to $40,000 (from $10,000).
Example: A New Jersey couple paying $25,000 in state/local taxes can now deduct the whole amount instead of being capped at $10K. That could save them thousands.
4. Perks for Tipped & Hourly Workers
- Deduct up to $25,000 in tips.
- Deduct up to $12,500 in overtime.
Example: Tina, a server making $35K with $15K in reported tips, can now deduct those tips. Her taxable income drops, meaning a bigger refund.
5. Earned Income Tax Credit (EITC)
- Max rises to $8,046 for families with 3+ kids.
Example: Carlos and Maria, with three kids and $40K income, may see a refund jump thanks to this boost.
6. Small Business Benefits
- 20% QBI deduction stays in play.
- Section 179 and bonus depreciation help business owners reinvest.
Standard Deductions (Tax Year 2024 vs. 2025)
This table shows the increased standard deductions for the upcoming tax year, which means less of your income is subject to tax.
| Filing Status | Tax Year 2024 | Tax Year 2025 | Increase |
| Single | $14,600 | $15,000 | $400 |
| Married Filing Jointly | $29,200 | $30,000 | $800 |
| Head of Household | $21,900 | $22,500 | $600 |
Historical Context: How This Compares
If this feels familiar, it’s because tax law swings like a pendulum. The 2017 Tax Cuts and Jobs Act (TCJA) brought big deductions but capped SALT at $10K. Now, the pendulum is swinging back, especially for families and service workers who missed out.
Step-By-Step Guide: How to Qualify
- Check your filing status (married, head of household, etc.).
- Update your W-4 at work with the IRS Withholding Estimator.
- Track dependents’ eligibility—kids must have valid SSNs.
- Save receipts for medical, education, or work expenses.
- Decide: standard deduction or itemizing? Run both scenarios.
- Max out retirement/HSA contributions for extra tax breaks.
- File early to beat IRS backlogs and get your refund faster.
Top 3 Tax Refund Mistakes to Avoid
Choosing the Wrong Filing Status: Your filing status can significantly impact your refund. Make sure you select the correct status—such as “Head of Household”—if you qualify, to get the best possible benefit.
Filing Too Early: Don’t rush to file before you receive all your tax documents, like your W-2 and 1099 forms. You could miss out on important income or deductions, requiring you to file an amended return later.
Incorrect Information: A simple typo in a Social Security number or bank account number can delay your refund for weeks or even months. Always double-check your personal information.
Real-World Case Study or Mini Example
Sarah, a single mother of two, was worried about her tax bill for the year. After a major IRS update, she learned about a new credit she qualified for. By using a free online tax tool, she discovered that the new credit, combined with the increased standard deduction, would boost her refund by over $1,000. This extra money will go toward paying down her student loans, making a real difference in her family’s financial future.
Expert Insights
CPA Janet Morris told Kiplinger:
“The IRS changes this year are some of the most taxpayer-friendly we’ve seen in a decade. Families and hourly workers stand to gain the most, but only if they file correctly and plan ahead.”
The IRS itself urges taxpayers to review their situation before year-end to avoid surprises.
FAQs
Will everyone get a bigger refund?
Not guaranteed, but many will—especially families, service workers, and high-tax state residents.
Do these changes apply to 2024 returns?
No. They apply to 2025 tax year (filed in 2026).
Should I itemize?
Only if itemized deductions (mortgage interest, SALT, charity) exceed the standard deduction.
Can freelancers claim these benefits?
Yes! Self-employed folks can use QBI, Section 179, and bonus depreciation.
Is the Child Tax Credit refundable?
Partially. Families with no tax liability may still get a refund check.
