Tax season has officially begun, and financial experts are encouraging taxpayers to file early to take advantage of new deductions that could result in significant savings or larger refunds.
Tax code changes from legislation passed last year are expected to benefit most American taxpayers.
“Most people are going end up paying less in taxes this year, if their situation hasn’t changed that much,” said Jon Maroni with Numerica Credit Union.
The most significant change involves increased standard deduction limits, which will allow more Americans to file for free rather than itemizing their deductions.
“And the nice thing about that is when you don’t have to itemize you often can file your taxes for free, because they’re simple,” Maroni explained.
Families will see expanded benefits through increased child tax credits. Washington state residents have access to an additional state-specific program for working families.
Hourly workers stand to gain substantially from new deduction opportunities for overtime pay and tips.
“For a lot of hourly workers and especially if you get a lot of tips that you’re reporting that actually can be a pretty tremendous benefit,” Maroni said.
Financial experts strongly recommend filing taxes early this year to protect against tax fraud.
“We do see fraud situations where people try to file tax returns on behalf of others. If you file earlier you reduce the risk of that happening,” Maroni noted.
While receiving a tax refund may feel rewarding, Maroni suggests taxpayers consider adjusting their withholdings to optimize their financial situation throughout the year.
“A lot of people like to get refunds and I totally understand why, in reality you might be financially better off to owe just about zero or pay a little bit and have that money throughout the course of the year,” he advised.
The new tax provisions represent a shift toward simplifying the filing process for average taxpayers while providing targeted relief for working families and hourly employees.
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