6. Child Tax Credit (CTC)
Got kids? Well, here’s a tax credit just for you! The child tax credit lets you credit up to $2,200 per dependent child under the age of 17. The income limit is $400,000 for married filing jointly and $200,000 for all the other filing statuses. The CTC is also partially refundable up to $1,700.17
7. Child and Dependent Care Credit
This is another great credit parents and guardians should know about. The child and dependent care credit is a nonrefundable credit that allows taxpayers to offset some of the costs for care provided while you’re working, things like child care facilities and in-home caregivers for older dependents.
Here’s how it works: You can claim 20–35% of up to $3,000 ($6,000 for two or more dependents) for the cost of care. The percentage of the credit depends on your AGI. Families with an AGI of $15,000 or less can claim the full 35%. As you earn more income, the credit is reduced. But a family with an AGI of over $43,000 can still claim the minimum credit rate of 20%.18
Let’s break it down. You pay $250 a week for Junior to go to day care. That’s about $13,000 a year (ouch). If you qualify to credit 20% of $3,000 in care costs, you get $600 knocked off your tax bill. Not too shabby!
8. Education Credits
Bettering yourself or your children through education is a good thing, and it’s even better when you get a tax break.
The American opportunity tax credit (AOTC) is a partially refundable credit that pays for education expenses for students during their first four years of college. You can claim up to $2,500 per student—and if the credit brings your tax bill to zero, you could receive up to $1,000 (that’s 40% of the credit) as a refund.19
Another education credit is the lifetime learning credit (LLC). This one isn’t refundable, but it covers up to $2,000 in qualified educational expenses per return.20 While you can only take advantage of the AOTC for undergrad expenses, you can reap the benefits of the LLC for expenses related to all kinds of educational opportunities—from degree programs to technical classes to courses for improving job skills.
But beware: You can claim both the AOTC and the LLC on your tax return—but not for the same student or the same expenses.21 And both credits have income limits: You cannot claim either credit if your modified adjusted gross income (MAGI) is more than $90,000 ($180,000 for those who are married filing jointly).22
In addition to these credits, you could be eligible for a tax deduction (up to $2,500) for interest you’ve paid on student loans. Now, the student loan interest deduction is definitely not a reason to keep student loans around if you currently have them since the deduction is basically a small refund of what you’ve already paid—it’s not free money.
So you should still pay off your student loans as soon as possible. But if you do still have student loans and you’re working hard to pay them off, this deduction could be a nice bonus.
9. Adoption Credit
If you adopt a child, there’s a good chance you’ll be able to claim the adoption tax credit for qualified adoption expenses (up to $17,280 per qualifying child for 2025). The credit, which applies to international, domestic, private or public foster care adoptions, also becomes partially refundable (up to $5,000) for the 2025 tax year as well.23
How the One Big Beautiful Bill Impacts Your 2025 Taxes
The OBBBA covers a lot of ground when it comes to taxes. For now, let’s go over some of the major headlines that might impact your tax bill (for better or worse) when you sit down to file your return this spring.
1. No taxes on tips or overtime pay (for the most part).
If you’re a tipped worker, you can deduct up to $25,000 of tips from your income—which means you’ll be able to keep more money in your pocket this year. The deduction starts to phase out for anyone making more than $150,000 per year ($300,000 for couples).24
For overtime workers, the new law adds a tax deduction of up to $12,500 ($25,000 for couples) for overtime wages from 2025 through 2028. And just like with tipped workers, the deduction phases out for those making more than $150,000 per year.25
There’s a big caveat here: This tax cut for overtime pay is mostly available to hourly—not salaried—workers.
2. Seniors get a new tax deduction.
The OBBBA gives seniors (ages 65 and older) a temporary tax deduction of $6,000, and it’s available whether you take the standard deduction or itemize.
The deduction begins to phase out for seniors who earn more than $75,000 a year ($150,000 for couples), so you’ll have to settle for a reduced deduction if you’re above that income threshold. This deduction is available from 2025 through 2028, so enjoy it while you can.26
3. The SALT deduction gets a huge bump.
If you live in a state with high state and local taxes (we see you, California and New York), you’re probably over the moon about the beefed-up state and local tax (SALT) deduction. The new law raises the cap on the amount of state and local taxes (which also includes property taxes) you can write off your tax return to $40,000 (up from $10,000).
However, if you make more than $500,000 per year, you’ll get a reduced deduction. And the deduction drops back down to $10,000 if your income is $600,000 or more. This is also a temporary deduction, with the cap set to return to the $10,000 mark starting in 2030.27
4. This is your last chance to enjoy tax breaks for clean energy home improvements and electric vehicles.
The bill ends tax credits for rooftop solar, geothermal heat pumps and other energy-efficient home devices at the end of 2025. The bill also axed the $7,500 tax credit that reduced the cost of electric vehicles—that one expired on September 30, 2025.28
File Your Taxes With Confidence in 2026
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But what if you have a more complicated tax situation or had a wild year in 2025? In that case, working with a tax pro is a smart move. And if you’re looking for a trustworthy tax professional who serves your area, try one of our RamseyTrusted® tax pros. They know the tax code inside and out so you don’t have to.
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