Key Tax Changes for the Upcoming Tax Season: Standard Deductions, SALT Cap, and Tip Tax

Major Tax Law Changes

• 📄 The passage of a significant tax law, referred to as the "one big beautiful bill," has introduced several changes impacting the upcoming tax season.

Increased Standard Deductions

• 💰 For single filers, the standard deduction has increased from $15,000 to $15,750 for 2025.
• 👨‍👩‍👧‍👦 For those married filing jointly, the standard deduction is $31,500, which must be surpassed by itemized deductions for them to be considered.

State and Local Tax (SALT) Cap Adjustments

• ⚠️ The cap on state and local taxes (SALT) has been adjusted. Previously, the cap was $10,000.
• 📈 The new provisions allow for deductions ranging from $10,000 to $40,000 in 2025, depending on adjusted gross income.
• 🧩 It's important to note that SALT deductions are itemized deductions, meaning they only apply if total itemized deductions exceed the standard deduction.

Tax on Tips

• 🍽️ A significant change for servers is the introduction of no tax on tips, with certain conditions.
• ⚠️ This benefit is capped at $25,000 per return for a married filing joint couple, not per individual.