What to know about standard deduction changes – NBC New York

Americans filing their taxes this year will see several significant changes — including a larger standard deduction, new tax breaks on tips and overtime pay, and an expanded deduction for seniors.

The updates come under the One Big Beautiful Bill Act and could affect millions of taxpayers.

Nearly 90% of tax filers claim the standard deduction. This year, that deduction increases by nearly 8%.

Jay Foley, president of MaxGuard Wealth, said the new thresholds are substantially higher.

“The standard deduction if you’re married, filing jointly, is $31,500,” Foley said. “That’s if you’re married. And if you’re single, it is $15,750.”

In addition to the higher standard deduction, the new law eliminates taxes on certain tips — as long as the gratuity is added to a credit card and not paid in cash.

“So you will not pay taxes on $12,500 of these if you’re single,” Foley said. “And if you are married, it is up to $25,000.”

The law also creates a new deduction for overtime pay. Income earned from overtime work can now be deducted up to $12,500 for single filers and up to $25,000 for married couples filing jointly.

Seniors are also eligible for a new bonus deduction.

“If you’re 65 or older, you are entitled to a bonus deduction of $6,000,” Foley said. “And it doesn’t matter if you take the standard deduction or you itemize, you’re still entitled to that $6,000. If you’re married, it is $12,000.”

Homeowners may benefit as well. The cap on the state and local tax deduction, known as the SALT limit, has increased from $10,000 to $40,000. That means property taxes and certain other state and local taxes — along with mortgage interest — may be deductible at higher levels than in previous years.

Not everyone, however, will qualify for the new breaks.

Shahnaz Rashid of New York said she was hoping for a refund this year but learned the changes would not apply to her.

“I already did my new taxes and I asked about the new deductions, and they said it doesn’t apply to you,” Rashid said.

The deadline to file 2025 federal income taxes is April 15. Tax experts recommend reviewing the new deductions carefully or consulting a financial professional to determine eligibility.

This story was originally reported for broadcast by NBC New York. AI tools helped convert the story to a digital article, and an NBC New York journalist edited the article for publication.