Tax season is here. Here’s what you need to know for stress-free filing

Tax Season Begins: What You Need to Know for 2025 Filing

Tax season is officially underway, with Americans facing an April 15 deadline to file returns with the Internal Revenue Service. Financial experts recommend starting the process early to avoid last-minute stress.

“Don’t wait until the last minute but also don’t rush,” advises Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals.

This year’s filing season brings significant changes due to the Republican tax and spending bill signed by President Donald Trump last summer. The new legislation introduces several key deductions, including tax breaks for tips, overtime, car loan interest, and additional deductions for taxpayers who were 65 or older as of December 31.

The impact on refunds could be substantial. Last year’s average tax refund was $3,167, but analysts project this figure could increase by approximately $1,000 thanks to the recent tax law changes. The IRS processed more than 165 million individual income tax returns last year, with 94% submitted electronically.

For those gathering documentation, essential items include Social Security numbers, W-2 forms for employed individuals, 1099-G forms for unemployed taxpayers, 1099 forms for self-employed workers, savings and investment records, and documentation for eligible deductions such as educational expenses, medical bills, and charitable donations.

O’Saben recommends organizing all current documents alongside last year’s returns before beginning the filing process. Taxpayers can also create an identity protection PIN number with the IRS as an additional security measure against identity theft.

Among the most significant changes this year is the adjustment to the standard deduction. Single taxpayers can now claim $15,750, while married couples filing jointly have an increased deduction of $31,500. Heads of households can claim a standard deduction of $23,625.

The deduction cap on state and local taxes (SALT) has dramatically increased from $10,000 to $40,000. This change, known as the Working Families Tax Cut enacted in July 2025, represents a major benefit for residents of high-tax states.

“This is a big benefit, especially for states like California, New York, and New Jersey, that have a higher state income tax,” explains Keith Hall, president and CEO of the National Association for the Self-Employed and a certified CPA.

The SALT deduction allows taxpayers to deduct certain state and local taxes paid during the tax year. Before this change, the deduction had been capped at $10,000 since 2018. Taxpayers who haven’t previously itemized their SALT deductions might want to reconsider their strategy this year.

Another notable change is the new deduction for tips, though it’s more limited than the “no tax on tips” description might suggest. This deduction applies only to qualified voluntary tips, whether cash or electronic, and is capped at $2,500 annually.

“The main thing is, hey, it has to be voluntary (tips),” clarifies Miguel Burgos, a certified public accountant and TurboTax expert.

The tip deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers) and is limited to specific industries where tipping is common practice, such as food service, bartending, housekeeping, and entertainment. A new tax form, Schedule 1-A, must be completed to claim this and other new deductions, including the SALT deduction increase, car loan interest, and senior deductions.

While the IRS Direct File system won’t be available this year, taxpayers earning less than $89,000 annually can use IRS Free File, which offers free guided tax preparation through eight partner services including TaxAct and FreeTaxUSA. Beyond commercial options like TurboTax and H&R Block, taxpayers can also hire certified professionals.

The IRS funds two free assistance programs: Volunteer Income Tax Assistance (VITA) for those earning $69,000 or less, people with disabilities, or limited English speakers; and Tax Counseling for the Elderly (TCE) for those 60 and older.

To avoid common filing mistakes, experts recommend verifying personal information, retrieving online tax statements, and ensuring all income sources are reported. The child tax credit currently stands at $2,200 per child, with $1,700 refundable for qualifying families with at least $2,500 in annual income.

In another significant change, the IRS began phasing out paper tax refund checks last September. Direct deposit is now strongly recommended for receiving refunds.

As tax season progresses, officials warn of increased scam activity. The IRS never initiates contact through phone, text, email, or social media, so taxpayers should remain vigilant about potential fraud. Financial experts recommend keeping copies of tax returns for five to seven years in case of future audits.