Last week, we discussed reasons why taxpayers should not just file a Tax Return on April 15, then immediately forget about Tax Planning until next year. Ignoring Tax Planning is never a good idea. There are special circumstances this year that may reward Americans in ways not seen before. In addition to improving current year results, some people may be able to save enough from the Tax Return already filed to warrant filing a Corrected Return.

On July 4, 2025, President Trump signed the 2025 Working Families Tax Cuts Act (commonly known as the One Big Beautiful Bill Act, or OBBBA.) Provisions of OBBBA were retroactive to January 1, 2025, and the IRS did not have time to incorporate all the taxpayer-friendly provisions into the 2025 Form 1040 Individual Income Tax Return. Instead, taxpayers and their tax preparers were left to do their own research to assure best results.

OBBBA provisions so-called “no tax on tips” and “no tax on overtime” were made retroactive to January 1, 2025. Both are capped for each taxpayer and are gradually phased out according to overall income. That fact should not deter any taxpayers from understanding and utilizing the formulas. These exclusions can provide what is essentially “found money” for workers who earn tips and/or work overtime hours.

For taxpayers ages 65 and up, there is also a new $6,000 per person deduction from Taxable Income. This deduction is based on the concept of “no tax on Social Security,” and is available to seniors (must have attained age 65 by year-end), regardless of filing status. Additionally, even seniors who are not receiving Social Security monthly benefits qualify for the new deduction.

It is not necessary to itemize deductions to have this extra deduction reduce Taxable Income. Eligible taxpayers should all take advantage of the provision.

To put it mildly, OBBBA was a Godsend for both working and retired Americans. Not taking advantage of our new tax savings would be wasteful. For tax year 2025, there is an additional burden on taxpayers to know and apply the savings, but there is light at the end of the tunnel.

Employers will be required to issue a new style W-2 income reporting form at the end of 2026. Income from tips and/or overtime that may be excluded from Federal Income Tax will be itemized. Responsibility for claiming the exclusions will no longer be solely upon the taxpayer and the preparer, tax software, or tax professionals. While no analysis is yet available, I suspect that many people missed at least part of the 2025 tax savings.

These new provisions are taxpayer-friendly and should not be overlooked, even for last year. Go back and take a look at your 2025 Tax Return to be sure. You just might save some “extra” cash.