New Tax Issues to Know Before the Filing Season

By Andi Anderson

As the tax filing season approaches, taxpayers are encouraged to prepare early due to several new issues that may affect 2025 returns. Planning ahead can help returns process faster and ensure individuals receive the best possible refund for their situation.

According to Barb Wollan, a health and human sciences educator with Iowa State University Extension and Outreach, preparation remains one of the most important steps in successful tax filing.

Low and moderate income taxpayers are encouraged to consider free tax help through the Volunteer Income Tax Assistance program. These sites use IRS certified volunteers to prepare and electronically file tax returns at no cost for eligible individuals.

Most households earning under $69,000 qualify, unless their return includes complex items such as farm income, rental income, or home business deductions. VITA sites are available throughout Iowa, including several located at Extension offices.

Several new deductions are available for the 2025 tax year. These include deductions for voluntary tip income and overtime pay.

To claim these deductions, taxpayers must have a statement from their employer showing the amount of qualifying income, as this information is not included on a W 2 form.

Individuals aged 65 and older may also claim a new senior deduction of $6,000. This deduction is added to existing standard or itemized deductions and does not require documentation. Eligibility is based solely on the taxpayer’s birthdate.

Another major change involves refunds. For the first time, the Internal Revenue Service will no longer issue paper refund checks. All taxpayers must use direct deposit.

This requires providing a bank routing number and account number for a checking or savings account in the taxpayer’s name. Refunds can also be sent to prepaid debit cards, but routing and account numbers must still be provided separately.

Other information that may affect a tax return includes daycare expenses, education costs, retirement contributions, and self-employment business expenses. Reviewing last year’s return can help identify needed documents.

Additional tax education is available through “Understanding Taxes,” a free publication developed with UpLift by Iowa State University associate professor Suzanne Bartholomae and Wollan.

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