How to Use Trump’s New Tax Cuts to Your Advantage Now

The recent passage of the “big, beautiful” bill by Congress and President Donald Trump has brought about several retroactive tax changes, giving taxpayers the opportunity to benefit sooner rather than later. The One Big Beautiful Bill Act, signed into law just two days after the midpoint of the 2025 tax year, has introduced key tax cuts that apply to the current tax year. This means that taxpayers will see the impact of these changes on the returns they file next spring, by April 15, 2026.

Certain groups of taxpayers stand to gain larger tax refunds as a result of these provisions. For example, the legislation includes a $6,000 “senior bonus” for many taxpayers aged 65 and older, along with new deductions for tipped workers and employees working overtime. With the implementation of the new law, many Americans may have been overwithholding taxes in the first half of the year.

While a tax refund can be a welcome financial boost in the spring, financial experts generally advise against setting your withholding too high to avoid receiving a large refund. Having access to the money throughout the year can be beneficial, especially if there is a present need for funds. Additionally, by receiving a tax refund, individuals miss out on the opportunity for that money to accrue interest over time, essentially providing the government with an interest-free loan.

To avoid a larger refund due to the new law and to start taking advantage of its tax benefits, certain groups of taxpayers should consider adjusting their withholding midyear. This includes taxpayers eligible for the new “senior deduction,” which allows qualifying individuals aged 65 and older to claim a deduction of up to $6,000. If income exceeds $75,000 for an individual or $150,000 for couples filing jointly, the deduction is phased out.

Making adjustments to withhold less money in the second half of the year can help eligible taxpayers access the benefits of the senior deduction sooner rather than waiting for a tax refund. While the potential interest gained over six months may not be significant, it is still worth considering for those who qualify for the deduction.

Ultimately, the goal is to strike a balance with your tax withholding to ensure that you neither owe money nor receive a large refund from the government. By staying informed about the changes brought about by the new law and adjusting your withholding accordingly, you can make the most of the tax benefits available to you. When it comes to tax laws and their impact on individuals, the size of the numbers involved can often determine the significance of the changes. Some may argue that unless the numbers are large, the impact may not be as substantial. However, even small adjustments in tax provisions can have a meaningful effect on certain groups of taxpayers.

One notable provision in the tax bill that may not seem significant at first glance is the increase in the standard deduction. The standard deduction is the amount of income that non-itemizers can shield from taxes. In the new tax law, the standard deduction has been raised from $15,000 to $15,750 for single filers and from $30,000 to $31,500 for couples.

While the potential tax savings from this increased standard deduction may only amount to a few hundred dollars for individuals under 65, there are certain situations where it could make a difference. Bob Lickwar, a tax managing director at UHY, points out that individuals who have received tip income or overtime may benefit from this deduction. For these individuals, the increased standard deduction could result in a tax break for the additional income they have earned.

Another provision in the tax bill that may not seem significant at first is the deduction for certain overtime workers. The new tax law creates a deduction of up to $12,500 for workers who clock additional hours, such as nurses or technicians. This deduction does not apply to highly compensated employees who perform executive, administrative, or professional duties.

According to tax experts, the tax savings from this provision could be substantial, especially for individuals who qualify for the tax-free overtime and tip income deductions. For example, a married couple could potentially save around $8,750 in taxes if they had $250,000 of taxable income and worked an additional $25,000 of overtime.

Similarly, tipped employees, such as restaurant servers and bartenders, can now deduct tip income up to $25,000. This provision could result in significant tax savings for these workers, prompting them to consider adjusting their withholding to take advantage of the deduction.

In conclusion, while some tax provisions may not have a large impact in terms of numbers, they can still make a difference for certain groups of taxpayers. It is important for individuals to stay informed about these changes and consider adjusting their withholding if they qualify for deductions that could result in tax savings. By being proactive, taxpayers can maximize their benefits under the new tax law.