Navigating new and redesigned IRS forms for 2025

For tax year 2025, tax professionals face a landscape of significant changes, new forms and enhanced compliance requirements. Below is a comprehensive overview of what tax pros need to know to prepare for the 2026 filing season, including new deductions, reporting requirements, electronic filing mandates and IRS initiatives to combat fraud and improve taxpayer service.

New and enhanced deductions

The One Big Beautiful Bill Act (OBBBA) introduces several new deductions and expands existing ones, many of which are available to both itemizers and non-itemizers. Tax professionals should ensure clients are aware of these opportunities and understand the eligibility criteria:

• Deduction for qualified tips: Up to $25,000 of qualified tips can be deducted by employees in occupations customarily receiving tips, provided the tips are reported to the employer or IRS. The deduction phases out for modified AGI over $150,000 ($300,000 for joint filers). 
• Deduction for qualified overtime: Up to $12,500 ($25,000 if married filing jointly) of the “and-a-half” portion of overtime pay required under the Fair Labor Standards Act can be deducted. The same AGI phaseout applies as for tips.
• Deduction for qualified passenger vehicle loan interest: Up to $10,000 of interest paid on a loan (originated after Dec. 31, 2024) for a new, U.S.-assembled passenger vehicle can be deducted. The deduction phases out for AGI over $100,000 ($200,000 for joint filers). The vehicle’s VIN must be reported on the return. 
• Enhanced deduction for seniors: Individuals age 65 and older may claim an additional $6,000 deduction ($12,000 if both spouses qualify), subject to a phaseout for AGI over $75,000 ($150,000 for joint filers). 
• Increased standard deduction: The standard deduction rises to $31,500 (MFJ), $15,750 (single/MFS) and $23,625 (HOH) for 2025 returns.
• Child tax credit: The maximum credit increases to $2,200 per eligible child, with new SSN requirements for both the taxpayer and the child. 
• Adoption credit: Up to $5,000 of the credit is refundable for 2025; the maximum credit is $17,280.

Withholding and Form W-4 updates

Employees who wish to account for the new deductions in their 2026 withholding must submit a new Form W-4, Employee’s Withholding Certificate. The IRS announced that Form W-4, withholding tables and payroll forms (Forms W-2, 941, etc.) remain unchanged for 2025 to allow time for implementation of OBBBA changes. The IRS Tax Withholding Estimator has been updated to account for the increased standard deduction and the enhanced child tax credit.

New and revised forms 

• Form 1041 (Estates and Trusts): The IRS has released new XML schemas and business rules for Form 1041, U.S. Income Tax Return for Estates and Trusts. Tax software developers and preparers should ensure their systems are updated to accommodate these changes. 
• Form 1042-S: Publication 1187 (Rev. 9/2025) details updated electronic filing specifications for Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. 

Electronic filing and compliance

• E-file mandate expansion: The threshold for mandatory e-filing of information returns is now 10 or more returns, aggregated across all types (e.g., Forms 1099, 1042-S, W-2, 1095-B, etc.).
• Amended returns: If the original return was e-filed, any corrections must also be e-filed using the same system.
• Form 1041 and Form 1042-S: New schemas and business rules for 2025 must be implemented for Form 1041, and Form 1042-S filers must follow the updated electronic filing specifications in Publication 1187.
• TCC requirement: Transmitter Control Code (TCC) is required for Filing Information Returns Electronically (FIRE) system e-filing; for more information see Publication 1220 and the IRS IR Application for TCC.

Form 1099-K and digital asset reporting on Form 1099-DA

• New Form 1099-DA: Required for brokers reporting digital asset sales for 2025. 
• Those who must file: Brokers (including digital asset exchanges) must file Form 1099-DA for each customer with reportable transactions.
• E-file mandate: The e-file applies to filers with 10+ returns.
• Corrections: Must be e-filed if the original was e-filed.
• Transition: IRS is providing penalty relief for 2025 as the new reporting regime is implemented.

Form 1099-K:

• Thresholds: The $20,000/200 transaction threshold is restored for 2025 (replacing the $600 threshold).
• Backup withholding: Now applies only if the $20,000/200 transaction threshold is met and the payee fails to provide a correct TIN.
• Reporting: Continue to use current procedures for 2025; IRS will update forms and instructions for 2026.

What tax pros should do now

Beyond forms and deductions, IRS operational initiatives continue to shape the filing landscape. Expanded online account features and continued emphasis on identity protection reflect ongoing efforts to improve taxpayer service and combat fraud.

Tax year 2025 brings substantial changes that will impact both tax professionals and their clients. Staying current with new forms, deductions and compliance requirements is essential as the 2026 filing season approaches. To help practitioners navigate these updates with confidence, NATP is offering a Jan. 26, 2026, Apply the 2025 IRS Form Changes in Real Filing Scenarios webinar that walks through new and redesigned IRS forms, updated reporting rules and practical workflow considerations. 

Tax professionals are encouraged to leverage IRS resources, update their practices, and use this training opportunity to strengthen client communication and ensure a smooth and compliant filing season.