New deductions, updated credits, and why your refund may change in 2026. If you are filing taxes in 2026, your refund or tax bill might look different from what you expected.
New legislation known as the “One Big Beautiful Bill” introduces several tax deductions and credit updates that could directly impact your 2025 return, according to the IRS. Some of these changes are retroactive, which means taxpayers may not have adjusted their withholding or estimated payments yet. For individuals and business owners across California and the Central Valley, this creates both opportunity and risk. At DeMera DeMera Cameron LLP, we are helping clients reassess their tax strategies to maximize savings and stay compliant.
Why Your 2025 Tax Outcome May Change
Many taxpayers planned their 2025 taxes based on prior rules.
Now:
- New deductions can lower taxable income
- Updated credits can increase refunds
- Retroactive changes may create underpayment or overpayment situations
If you have not adjusted your strategy, your return could shift significantly. The IRS has confirmed that inflation adjustments and new provisions are already affecting how taxpayers calculate their 2025 obligations.
New Tax Deductions to Know for 2025
Additional Deduction for Seniors Age 65 and Older
Taxpayers age 65 and older may qualify for up to $6,000 in additional deductions. This is in addition to the existing higher standard deduction.
This matters because it can reduce taxable income for retirees in Fresno, Clovis, and across the Central Valley.
Deduction for Tipped Workers
Eligible workers may deduct up to $25,000 in qualified tips per return.
Who this impacts:
- Hospitality workers
- Restaurant employees
- Service industry professionals
Overtime Income Deduction
Individuals may deduct:
- Up to $12,500 for single filers
- Up to $25,000 for joint filers
This applies to qualified overtime income.
If you are planning, this is especially relevant for hourly workers and industries with seasonal demand.
Auto Loan Interest Deduction
Taxpayers may deduct up to $10,000 in qualified passenger vehicle loan interest.
Important: This deduction phases out based on income and has eligibility requirements.
Important Note on Deductions
All of these deductions:
- Have income phase-outs
- Require proper documentation
- May interact with other tax benefits
Working with a CPA firm, like DeMera DeMera Cameron, helps ensure everything is applied correctly.
Key Tax Credit Updates for 2025
Adoption Credit Is Now Partially Refundable
Up to $5,000 per eligible child is now refundable and adjusted annually for inflation. The IRS also increased the maximum adoption credit and introduced partial refundability for eligible taxpayers.
Refundable credits can provide cash back even if no tax is owed.
Expanded Authority for Tribal Governments
Indian Tribal governments can now determine whether a child has special needs for adoption credit eligibility.
Child Tax Credit Requirements
To claim the Child Tax Credit:
- The taxpayer and spouse must have valid Social Security numbers
- Each qualifying child must also have a valid Social Security number issued before the filing deadline
Risk: Missing documentation can result in losing the credit.
What This Means for California Taxpayers
For individuals and businesses in:
- Fresno
- Clovis
- Central Valley
These updates create new opportunities to:
- Reduce taxable income
- Increase refunds
- Improve tax planning strategies
They also introduce more complexity.
Avoid Common Tax Mistakes in 2026
With new rules in place, taxpayers face a higher risk of:
- Overstated deductions
- Missed eligibility requirements
- Falling for refund scams or misinformation
The IRS recommends using tools like the IRS Interactive Tax Assistant to help determine eligibility for deductions and credits.
How DDC Helps You Stay Ahead
At DeMera DeMera Cameron LLP, we help clients identify all eligible deductions and credits, plan proactively for tax law changes, adjust withholding and estimated payments, and stay compliant with IRS requirements.
You can explore additional services on the DDC website, including tax planning, bookkeeping, and business advisory. The 2025 tax year is not business as usual. With new deductions, updated credits, and retroactive changes, your tax outcome in 2026 may look very different from what you expected. The earlier you plan, the more you can optimize. Do not wait until tax season to find out you missed opportunities.
Connect with DeMera DeMera Cameron LLP to review your 2025 tax strategy and maximize your return.
FAQ’s: Frequently Asked Questions
Will the new tax law affect my 2025 refund?
Yes. New deductions and updated credits may lower your tax bill or increase your refund when filing in 2026.
What new deductions are available for 2025?
Seniors, tipped workers, and overtime earners may qualify for new deductions. Auto loan interest may also be deductible, depending on income.
Do I need to claim these tax benefits?
Yes. Deductions and credits must be claimed on your return and require proper documentation.
What changed with the Child Tax Credit?
Taxpayers and qualifying children must have valid Social Security numbers to claim the credit.
Is the Adoption Credit refundable?
Partially. Up to $5,000 per child is refundable starting in the 2025 tax year.
Should I update my tax withholding?
Possibly. Retroactive changes may mean your current withholding is no longer accurate.
How do I check eligibility for tax credits?
Use the IRS Interactive Tax Assistant or consult a CPA for guidance.
How can DeMera DeMera Cameron LLP help?
DDC helps maximize deductions, ensure compliance, and optimize tax strategy for 2025 and beyond.