Tax Day Q&A: SDSU accounting expert breaks down the latest filing changes
New deductions and credits have kicked in, helping some filers. Pro tip: Steer clear of AI.
With Tax Day fast approaching, new federal tax changes could impact how you file your returns this year. From expanded deductions to the phaseout of certain credits, Amanda Marino, an assistant professor at 蘑菇视频网鈥檚 in the Fowler College of Business, explains what taxpayers should know before the deadline.
What are the biggest tax changes this year, and what鈥檚 driving them?
There are a lot of big changes this year that people should be aware of, especially following the passage of the One Big Beautiful Bill Act in July. The bill had a very large tax section. A lot of it was extensions for things put in place in 2017, like bigger standard deductions, lower rates and some tax benefits that were set to expire this year, but there is also a lot of new stuff.
There is now a deduction up to $25,000 for tip income, up to $12,500 for overtime income ($25,000 for joint filers), and $6,000 for the so-called senior bonus. You can deduct up to $10,000 for interest paid on some car loans. Starting next year, if you contribute to a qualified charity, you can deduct up to $1,000 ($2,000 for joint filers) even if you take the standard deduction. That's not going to help this year, but it's something to keep in mind for next year.
These are all noteworthy because for the 90% of Americans who take the standard deduction, personal expenses are generally not that much of a tax benefit. For the taxpayers who do itemize, the state and local tax deduction went from $10,000 to $40,000 for tax years 2025-29.
There is also an expanded child tax credit of $200 for qualifying children under 17. Now you can have $2,200 instead of $2,000, which is a nice boost. The adoption credit was also increased. Additionally, they are phasing out some clean energy credits after this year, so if you want to take advantage of those it鈥檚 now or never.
How do these changes actually affect everyday taxpayers?
Every year you can either take the standard deduction or the itemized deduction, and the standard deductions are so big now that most people just take the standard deduction, meaning that the expenses you pay at a personal level are not usually going to benefit you from a tax perspective.
Now, with some of these new deductions that have come about, you can get those in addition to either your itemized or standard deduction, so everyone can benefit from them. However, not everyone will qualify. If you have tip income or overtime, then you probably have kept an eye on this and knew it was coming. Both deductions begin to phase out when Modified Adjusted Gross Income (MAGI) exceeds $150,000 ($300,000 for joint filers). The senior deduction begins to phase out when MAGI exceeds $75,000 ($150,000 for joint filers). These are also temporary provisions, so they are only around for tax years 2025-28.
The deduction of auto loan interest only applies to folks that have a new car:something purchased after 2024 with final assembly in the U.S. single filers with a MAGI over $100,000 ($200,000 for joint filers) won鈥檛 qualify. So, there are some limitations there that filers need to be aware of.
How should people approach filing their taxes and using AI tools or software that incorporates AI? Is there anything filers should look out for?
I am a proponent of AI and I use it in my daily life, but with that said, AI is notoriously bad at taxes. The reason is taxes change every year: thresholds, limitations, rates, standard deduction amounts. Staying on top of the new numbers is very important, especially in a year like this where so much has changed. So as AI combs the internet for information on tax policy, it could be giving you guidance based on outdated material. You have to really make sure that what it鈥檚 giving you is accurate.
These tools can be great, especially for individuals with mostly just W-2 income, but you definitely want to keep digging. Any time I am asking tax-related questions to an AI platform, I will always ask for sources. You want to keep digging until you get back to the primary tax authority. More often than not, these platforms have the wrong year鈥檚 thresholds, the wrong year鈥檚 rates, and occasionally they just make stuff up altogether. Always check the output of AI, especially with taxes.
Once you start getting more business income or investment income, you really want to start thinking about getting some more assistance. You might have some more tax planning opportunities that you are not taking advantage of.
