Tax Preparation Simplified: Your Guide to the 2025 Tax Season

Top5Tax
Dec 8, 2025
3 min read

Updated: Jan 6

Tax season always brings questions, but 2025 is different. With new laws and IRS guidance rolling out, working families and small business owners have more opportunities than ever to save money. If you’ve been wondering about the latest tax changes, especially the buzz around tips and overtime, this post breaks it all down!

What People Are Asking About Taxes in 2025

Every year, certain questions dominate Google searches. Right now, taxpayers are asking:

"When is the tax deadline in 2025?"

Answer: April 15, 2026. If you need an extension, file it by this date as well.

"How do I check my refund status?"

Answer: Use the IRS “Where’s My Refund” tool.

"Do I need to report crypto gains?"

Answer: Yes, all cryptocurrency transactions must be reported.

"Can I deduct home office expenses?"

Answer: Only if you’re self-employed.

What Changed in the Tax Law This Year?

The new One Big Beautiful Bill Act (OBBBA) is the headline change for 2025. This sweeping reform is designed to put more money back in workers’ pockets.

Key Changes to Note

Here’s what matters most:

Tips Deduction: Up to $25,000 in tips are now tax-free.
Overtime Deduction: Up to $12,500 in overtime pay is deductible. (This is only the premium portion not all of the overtime pay).
Higher Standard Deduction: Families benefit from expanded deductions, reducing taxable income.
Senior Relief: Extra deductions for taxpayers aged 65 and older.
Vehicle Loan Interest Deduction: Helps working families manage transportation costs. Applies to loans taken out after December 31, 2024. Vehicle must be new, made‑in‑America personal‑use vehicles. Allows up to $10,000 per year in deductible interest (per IRS and CPA guidance) This deduction is available whether you itemize or take the standard deduction, and it runs through 2028.
Expanded SALT Deduction: Higher limits for state and local tax deductions.

IRS Guidance You Need to Know

The IRS issued Notice 2025-69 to explain how these new deductions work:

Employers will not separately report tips or overtime on W-2s.
Workers must keep their own records (pay stubs, tip logs).
The deduction applies to service industries like restaurants and hospitality.
Transition relief is available if documentation is incomplete.

Translation: If you earn tips or overtime, you’ll need to be diligent about tracking your income to claim the full benefit.

Why This Matters for Families and Businesses

Restaurant Workers: A server earning $20,000 in tips may owe zero federal tax on that income.
Small Business Owners: Offering overtime is more attractive since employees can deduct it.
Gig Workers: Service industry workers benefit most, but careful record-keeping is essential.

This isn’t just a tax break; it’s a chance to rethink how families budget and how businesses reward employees.

Action Steps to Take Now

Track Tips and Overtime: Keep a daily log and save pay stubs.
Review IRS Notice 2025-69: Make sure deductions are calculated correctly.
Adjust Withholding: Families should plan for lower taxable income.
Consult a Tax Pro: Small businesses should update payroll systems to support employees.

Final Thoughts

The 2025 tax season is full of opportunities. By understanding the new tip and overtime deductions, working families and small business owners can save thousands. Staying informed about trending tax questions ensures you’re ahead of the curve and ready to maximize your refund!

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