UNIVERSITY PARK, Pa. — Income tax season opened on Jan. 26, when the Internal Revenue Service (IRS) began accepting tax filings for the 2025 calendar year. Ed Jenkins, professor of practice in accounting at Penn State’s Smeal College of Business, shared in the Q&A below information and tips for taxpayers preparing their 2025 filings.
Q: What changes should taxpayers be aware of this year when filing their 2025 taxes?
Jenkins: There are quite a few changes. First, the IRS saw reductions in force. They're down about one-fourth of their workforce. That means that there are fewer people around to do the work.
Second, we had major legislation passed this summer — the One Big, Beautiful Bill Act (OBBBA). When Congress passes a big tax bill, there’s a lot of work to do at the IRS like updating forms and issuing new guidance and regulations. Third is the government shutdown that began on Oct. 1, 2025, and lasted for 43 days. That occurred during a time when the IRS was supposed to be getting all of this OBBBA work done for the opening of tax season. In short, the IRS has a lot to do in addition to reviewing filings and issuing returns, and fewer people to do it.
Q: What does this mean for the average taxpayer?
Jenkins: The average taxpayer should file early and file electronically. Avoid any manual handling and have your refund directly deposited into your bank account. If you owe the IRS money, pay through an electronic means, like direct debit. This will help ensure that the IRS receives and processes your filing on time.
Q: What are some of the provisions in the OBBBA that may affect taxpayers?
Jenkins: The OBBBA has lots of provisions. One of the biggest provisions was to make the 2017 Tax Cuts and Jobs Act tax rates and tables permanent, which among other things increased the standard deduction and decreased individual income tax brackets. Other benefits include increasing the child tax credit from $2,000 to $2,200 and lowering the corporate tax rate, which previously topped out at 35%, to a flat 21%.
Additional provisions cover changes like no tax on tips or overtime and a “super” standard deduction for seniors. That super standard deduction for seniors means an extra $6,000 per senior in addition to their standard deduction. So, if the taxpayer is married, filing jointly and both are over age 65, their normal standard deduction for 2025 is $31,500 plus an additional $1,600 each that the government gives to married individuals age 65 and older, for a total of $34,700. They also get the additional “super senior” deduction of $6,000 each for a total of $12,000 on Schedule 1A for 2025. The “super senior” deduction is subject to income phase-outs from $150,000 of income to $250,000 of income for joint filers. The total of both the standard deduction and the super senior deduction is $46,700 before they pay a penny of federal income tax.
There are also big provisions for businesses. The bonus depreciation was reinstated, meaning that businesses can expense 100% of their expenditures on machinery and equipment and trucks. The bill also enhanced Section 179 expensing, which applies to small businesses with less than around $4 million in capital additions each year. They can expense up to $2.5 million. That's a big financing feature because, essentially, a corporation taxed at 21% only needs 79% of the money to acquire a capital asset. This is because the government essentially becomes a financer by the 21% tax rate. For example, if a company wants to buy a piece of equipment for $1 million, they only need $790,000 in cash to purchase it.