2025 Tax Credits & Deductions: The "Big Beautiful" Guide to Your Refund

Tax season 2026 is officially here, and the rules for your 2025 return have changed significantly. Between inflation adjustments to the classics and the massive new deductions from the One Big Beautiful Bill Act (OBBBA), your refund potential might be higher than you expect.

Here is the breakdown of the top credits and the new "Big Three" deductions you need to know.

1. The Heavy Hitters: Family & Income Credits

• Child Tax Credit (CTC): For 2025, the maximum credit has increased to $2,200 per qualifying child. The refundable portion (the amount you can get back even if you owe $0 in tax) is now up to $1,700.

• Earned Income Tax Credit (EITC): A major boost for low-to-moderate-income workers. For the 2025 tax year, the maximum credit is $8,046 for those with three or more qualifying children.

• Child and Dependent Care Credit: This remains a non-refundable credit covering up to 30% of $3,000 in expenses ($6,000 for two or more dependents).
  

  

2. The New "Big Three" Deductions (OBBBA 2025)

These are "above-the-line" deductions, meaning you can claim them even if you take the Standard Deduction ($15,750 for singles / $31,500 for joint filers).

• No Tax on Tips: You can now deduct up to $25,000 of qualified tip income from your federal taxes. This applies to occupations that "customarily and regularly" received tips before 2025 (like servers, stylists, and gig workers).

• No Tax on Overtime: If you worked overtime in 2025, you may be able to deduct the "premium" portion of your pay (the "half" in time-and-a-half) up to $12,500 ($25,000 for joint filers).

• The $6,000 Senior Bonus: If you were 65 or older by December 31, 2025, you qualify for a brand-new $6,000 additional deduction ($12,000 for couples where both are 65+). This is in addition to the existing extra standard deduction for seniors.

  
  

  

  
  

3. Education & Savings

• American Opportunity Tax Credit (AOTC): Still provides up to $2,500 for the first four years of higher education, with $1,000 being refundable.

• Lifetime Learning Credit (LLC): Offers up to $2,000 for any level of post-secondary education. The income phase-out for both education credits is now aligned at $80,000 (single) or $160,000 (joint).

• Saver’s Credit: You can get a credit of up to $1,000 ($2,000 for joint filers) for contributing to a 401(k) or IRA. For 2025, the income limit to qualify is $79,000 for married couples.
  

  

4. Home & Wheels

• Energy-Efficient Home Improvement Credit: You can claim 30% of the cost for upgrades like windows or doors (up to $1,200/year) or heat pumps and biomass stoves (up to $2,000/year).

• U.S.-Assembled Car Loan Interest: A new OBBBA perk! You can deduct up to $10,000 in interest paid on loans for new vehicles that had their "final assembly" in the U.S.

• Note on EV Credits: The federal EV tax credits of $7,500 expired on October 1, 2025. If you bought your EV before that date, you may still be eligible to claim it on this return.