7 things to know before filing your 2025 tax return

Long Island and state tax professionals said several changes enacted through last year's sweeping federal tax bill are likely to bring savings to many taxpayers, including homeowners, seniors and tipped workers.

The Trump administration's sweeping One Big Beautiful Bill Act is projected to cut taxes for individuals by $129 billion in 2025, according to the Tax Foundation, a Washington, D.C., tax policy research group. The average taxpayer is estimated to see a tax cut of $611, with most savings going to middle and upper-middle income groups, and low-income filers seeing little in the way of savings, according to the foundation. 

Around 25,000 Internal Revenue Service workers have been terminated since last year, according to Belgium-based BDO, an international network of accounting and tax firms. The loss of staff could impact operations at the agency this year, tax experts said. 

Erin M. Collins with the Taxpayer Advocate Service, an independent organization within the IRS that helps taxpayers resolve tax issues, said in a recent report that while most taxpayers are likely to see few issues this year, staffing could slow down the processing of more complicated returns.

“The IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of extensive and complex tax law changes,” Collins said in a statement.

Tax professionals like Jeffrey Gentner, executive director of the New York State Society of Enrolled Agents, said more Long Islanders will likely have to turn to tax professionals this year to make sense of the changes in tax law. 

Here are seven things to know as taxpayers file their 2025 taxes.

Are SALT deductions expanded this year?

Yes. The state and local tax (SALT) deduction cap has been raised to $40,000 from a previous cap of $10,000, according to the Tax Foundation. 

Are there special deductions for seniors this year?

A new temporary deduction available for tax years 2025 through 2028 will be available this filing season, according to the IRS.

Taxpayers 65 and older can get a deduction of up to $6,000, while couples that are each 65 or older can get up to a $12,000, depending on income levels, Gentner said.  

The deduction phases out for filers with an adjusted gross income of more than $75,000, or $150,000 for joint filers, the IRS said. 

What about no federal tax on tips or overtime?

Taxpayers this year won’t have to pay federal taxes on overtime hours worked or on wages from cash or credit card tips, up to certain income levels.

However, payroll companies that produce W-2 wage and tax statements for employers are not required to break out overtime hours in tax forms until next year, said Erika Calderon, managing partner at accounting firm Brinster & Bergman LLP in Rockville Centre.

Filers will have to produce proof of overtime pay to their tax preparers, Calderon said. 

Deductions on overtime pay are only for the extra money earned from overtime, not a worker's base pay rate. For example, workers paid 1.5 times their hourly rate during overtime would be able to deduct the 0.5 in pay from their taxes this year, Gentner said.

Those in tipped occupations like servers, bartenders and salon workers can deduct up to $25,000 in tips, according to the IRS.

The deduction phases out for taxpayers who earn more than $150,000, or $300,000 for joint filers, the agency said.

Will free direct filing with IRS be available?

The IRS Direct File program, which was rolled out in 2024, was canceled last year by the Trump administration, Gentner said.

The program allowed New Yorkers who didn't itemize their deductions and made up to $200,000 a year to file their taxes free of charge through a federal online portal.

Are there any changes to the child tax credit?

The Empire State Child Credit has been expanded for this filing season.

Long Island parents can receive credit of up to $1,000 per child  younger than 4, and up to $330 per child ages 4 to 16, according to the state Department of Taxation and Finance.

Are the inflation refund checks sent out last year taxable?

Yes, that income remains taxable on a federal level, Calderon said

The state last year mailed out more than 8 million inflation refund checks worth up to $400 each to qualified New Yorkers to assist residents with rising consumer costs, the state said last year. 

Is the IRS moving away from paper?

The IRS began phasing out the use of paper checks in September and is asking  taxpayers for direct deposit information with their filings, the tax collection agency said.