“Plans are only good intentions unless they immediately degenerate into hard work.” —Peter Drucker
You ever get a surprise in April? You either owe way more than you thought, or your refund is not what you expected.
Well, the odds of that happening when you file your 2025 taxes just went up because of the One Big Beautiful Bill Act (OBBBA).
I want to bring this to your attention now, because mid-year is the best time to adjust course. Why? If your withholding from your paycheck is off, it’s compounding every pay period. Your strongest ally here is time.
The New OBBBA Tax Terrain
OBBBA is the biggest overhaul of the tax code since 2017. Which means it affects almost every taxpayer in some way (including you). So, let’s start with what’s changed:
Permanent Tax Brackets: The individual tax brackets set by the TCJA are now permanent. And, they’ll adjust every year with inflation. Which means if your wages keep pace with inflation, you won’t get bumped into a higher bracket just for getting a cost-of-living raise.
The Standard Deduction: Standard deductions jumped again: 31.5K for joint filers and 15.75K for singles. But if you live in a high-tax state, you may want to take a fresh look at itemizing, since the SALT cap is now 40K for married couples.
Above-the-Line Deductions: AKA, deductions that reduce your Adjusted Gross Income (AGI) even if you don’t itemize. Here’s what’s new:
- Tip Income Deduction: Up to 25K of reported tips can now be deducted directly from AGI.
- Overtime Premium Deduction: You can deduct the premium part (the “half” in “time-and-a-half”) of overtime pay, up to 12.5K/year.
- Auto Loan Interest: Interest on U.S.-assembled new cars (2025–2028 only) is now deductible up to 10K annually if your AGI is below 100K (single) or 200K (joint).
So, if you’re in one of these categories, you’ll want to securely keep pay stubs and W-2s showing reported tips and overtime premium pay, and car loan paperwork showing interest paid, VIN, and proof of U.S. assembly.
Family & Retiree Benefits:Families get a bump from OBBBA too: The Child Tax Credit climbs to 2.2K in 2025 and will now track with inflation.
Also, if you've recently had a baby or adopted a child (congrats!), you're eligible for a Trump Account. For children born between January 1, 2025, and December 31, 2028, the government makes a one-time 1K deposit. With decades to grow, even just by making small annual contributions, that money can really add up by the time your child turns 18.
And if you’re age 65 or older, you qualify for an additional 6K deduction on top of the current standard deduction (2K for single filers and 1.6K for per eligible spouse for married filers). Though this benefit phases out as income rises.
How to Adjust Withholding: Your Mid-Year Action Plan
Your first step here is a full sweep of your 2025 income picture. You need to estimate your:
- Total 2025 income (wages, self-employment, interest, dividends, capital gains, retirement distributions, gig work… everything).
- Total deductions and credits, factoring in OBBBA's new changes (see above).
- Expected filing status and dependents (especially if there's been a change: marriage, divorce, new baby, etc.).
Then, go to the IRS Tax Withholding Estimator and plug everything in. It’ll tell you if you're on track or if you’re heading for a “surprise” in April.
With those results, update your Form W-4. (Pro tip: you can use Step 4(c) on the W-4 to add any extra withholding you may need to catch up or pull back.)
The best thing you can do right now is not sit on your hands until January. Adjust your withholding. Run the numbers. Document what you need. These mid-year moves could save you dollars and stress during tax season.
Need help getting it right? That’s what we do. Let’s sit down, run your projections, and make sure you’re in the best possible position for tax season… while there’s time to make a difference: Schedule a time to discuss today.