The NewsWorthy – Special Edition: What’s Changed This Tax Season

Host: Erica Mandy
Guest: Andrew Lautz, Director of Tax Policy, Bipartisan Policy Center
Date: February 28, 2026

Overview

This special episode of The NewsWorthy dives into the significant changes ushered in by the “One Big Beautiful Bill Act,” a new tax law impacting millions of Americans for the 2025 tax season. Host Erica Mandy and tax policy expert Andrew Lautz break down the law's implications for everyday filers, families, and high-income earners, as well as the challenges facing a strained IRS. The episode also touches on high-profile political developments, including President Trump's lawsuit against the IRS.

Key Discussion Points & Insights

Major Tax Law Changes for 2025 Filers

[01:19 - 02:13]

• Standard Deduction Increase:
  • Single filers: +$750
  • Married couples: +$1,500
  • “About 85 to 90% of taxpayers take the standard deduction.” – Andrew Lautz [01:41]
• Child Tax Credit:
  • Increased to $2,200 per child (previously $2,000).
  • “That’s a $200 per child boost for a lot of families.” – Andrew Lautz [04:21]
• New Deductions:
  • Tip income and overtime income now have specific deductions.
  • Auto loan interest deduction for a new ‘Made in America’ vehicle.
  • Enhanced deduction for seniors (65+).

Impact on Refunds and Filing Complexity

[02:13 - 03:14]

• Larger Refunds Expected:
  • Professional estimates suggest average refunds may increase by several hundred dollars (from ~$3,000 to ~$3,500).
  • “On average, [refunds will] probably be several hundred dollars larger than usual.” – Andrew Lautz [02:53]
• Complexity:
  • New deductions could make some returns more complex.
  • Taxpayers must read the fine print as not all tip/overtime income qualifies.
  • “Even though something like ‘no tax on tips, no tax on overtime’ can fit on a bumper sticker, there are a lot of terms and conditions apply.” – Andrew Lautz [02:41]

Points of Confusion and What to Clarify

[03:14 - 05:08]

• Overtime Deduction Nuances:
  • Must be Fair Labor Standards Act (FLSA) overtime.
  • Only applies to the ‘half bonus’ (the extra in time-and-a-half pay).
  • “There’s a lot of confusion around just who qualifies for the overtime deduction… it’s just for that half bonus.” – Andrew Lautz [03:37]
• Child-Related Credits:
  • Child tax credit now adjusts with inflation in future years.
  • FSA (Flexible Spending Account) for dependent care increased (helpful in future years).

Practical Advice: What to Ask Your Accountant

[05:08 - 06:00]

• Ask about eligibility for new deductions/credits, such as auto loan interest or overtime pay.
• “Sometimes you don't know if you don't ask… the simplest question you can ask is, what are these new deductions and credits and might I be eligible for any of them?” – Andrew Lautz [05:44]

IRS Free Filing and Assistance

[06:00 - 06:47]

• The IRS’s free Direct File program is discontinued.
• Alternatives:
  • IRS Free File partner program (for simple returns and based on income)
  • Taxpayer Assistance Centers and Volunteer Income Tax Assistance (VITA) centers for those needing help without hiring a professional.

Tax Cuts: Who Benefits?

[06:47 - 08:12]

• Extension of 2017 Cuts:
  • Many individual tax cuts from 2017 are now permanent (affecting both middle and high-income earners).
• High-Income Benefits:
  • Larger estate tax exemption, higher alternative minimum tax thresholds, and an increased cap for the SALT (State and Local Tax) deduction ($10,000 → $40,000).
  • “Those are some changes that are going to benefit high income taxpayers more than middle and low income taxpayers.” – Andrew Lautz [07:43]

IRS Funding and Staffing Challenges

[08:12 - 09:34]

• Mixed Funding News:
  • Taxpayer services funding increased, but operations funding cut.
  • Major staff reductions: 20-25% reduction by November 2025.
  • Result: Smooth process for simple returns, but delays likely for complex inquiries due to fewer staff and resources.
  • “It may take longer to work with the IRS than usual… they are facing all these constraints.” – Andrew Lautz [09:24]

Long-Term Implications for IRS and Taxpayers

[12:25 - 14:09]

• Modernization Needs:
  • IRS risks falling behind private sector tax services.
  • Underfunding makes it harder for IRS to implement Congressional mandates and provide service.
  • “The more Congress asks IRS to do without actually providing the funding… the harder it gets for the IRS to deliver.” – Andrew Lautz [12:59]
• The Tax Gap:
  • Persistent gap between taxes owed and collected could grow without adequate funding.

What Congress Needs to Do

[13:23 - 14:09]

• Provide robust funding and oversight for IRS modernization and staffing.
• Uphold accountability along with funding to address management/operation issues.

President Trump’s Lawsuit Against the IRS

[14:09 - 15:18]

• President Trump is suing the IRS and Treasury for at least $10 billion over a leak of his tax records.
• The amount is almost the size of the entire IRS budget for 2026 ($11.2 billion).
• Lautz explains the lawsuit is “unprecedented” and, while significant for the agency, is a small fraction in the context of the federal budget.

Deficits and Revenue Context

[15:18 - 15:49]

• The U.S. runs persistent annual deficits (~$2 trillion), primarily funded by tax revenue and borrowing.
• “It's from taxpayers, it's also from our creditors. But yeah, a lot of it comes from you and me as federal taxpayers.” – Andrew Lautz [15:40]

Why This Filing Season Matters

[15:55 - 16:24]

• Lautz calls it “the most highly anticipated tax filing season since 2022,” due to sweeping changes and political scrutiny.
• “There’s going to be a lot of attention on this, and we will be following it close.” – Andrew Lautz [16:19]

Notable Quotes & Memorable Moments

• “Even though something like ‘no tax on tips, no tax on overtime’ can fit on a bumper sticker, there are a lot of terms and conditions apply.” – Andrew Lautz [02:41]
• “There’s a lot of confusion around just who qualifies for the overtime deduction… it’s just for that half bonus.” – Andrew Lautz [03:37]
• “Those are some changes that are going to benefit high income taxpayers more than middle and low income taxpayers.” – Andrew Lautz [07:43]
• “The more Congress asks IRS to do without actually providing the funding… the harder it gets for the IRS to deliver.” – Andrew Lautz [12:59]
• “This is probably the most highly anticipated tax filing season since 2022.” – Andrew Lautz [15:55]

Helpful Timestamps

| Segment | Timestamp | |------------------------------------------------|--------------| | Major tax changes overview | [01:19] | | Impact on refunds and complexity | [02:13] | | Overtime/tip deductions confusion | [03:25] | | Changes for parents (child tax credit, FSA) | [04:12] | | Practical questions for your tax preparer | [05:08] | | IRS free filing/alternatives | [06:00] | | Tax cuts for high-income Americans | [07:02] | | IRS funding and staff cuts | [08:31] | | Modernization and long-term IRS needs | [12:25] | | President Trump’s IRS lawsuit | [14:09] | | Revenue, deficit, and taxpayer dollars | [15:23] | | Why this season is so closely watched | [15:55] |

Conclusion

This episode provides a clear, concise, and approachable rundown of what's new for the 2025 tax season, who stands to gain, and the evolving challenges for both taxpayers and the IRS. Erica Mandy and Andrew Lautz offer practical insights and direct advice, making it essential listening for anyone filing taxes this year or interested in the interplay between tax policy and government funding.