New 2025 Tax Law Changes Explained for Quad Cities Taxpayers
Tax laws change every year, but some changes have a much bigger impact than others. The newest tax law updates for 2025 taxes are already affecting refunds, IRS letters, and how income is reported — especially for people who earn tips, overtime, or fixed retirement income. If these changes are properly administered, refunds should be the biggest in a while. When the changes were enacted, the government did not lower the withholding amount taken from your paychecks. This means that throughout the year they were withholding a larger amount than what they needed to.
At AmeriFile Tax Centers, we’ve been preparing tax returns for Quad Cities families and individuals for over 40 years. We’re already seeing where people are getting confused and how small misunderstandings may turn into delayed refunds or IRS notices.
This guide explains the most important changes, who they affect, and what to watch out for before you file.
No Tax on Tips: What This Really Means
One of the most talked-about tax law changes is the proposal surrounding “no tax on tips.” While the idea sounds straightforward, the reality is more complex than many people realize.
Tips are still considered income and must be reported. What’s changing is how certain qualified tips may be treated for tax purposes under specific conditions. Not all tipped workers qualify, and not all tips are treated the same.
We’re already seeing confusion among restaurant servers, bartenders, delivery drivers, and hospitality workers who believe this change means tips don’t need to be reported at all. That is not correct, and incorrect reporting is one of the fastest ways to trigger IRS letters or refund delays.
Proper classification, accurate reporting, and understanding employer reporting requirements all matter more than ever under this change.
No Tax on Overtime: Why Expectations Don’t Always Match Reality
Another change getting a lot of attention is the treatment of overtime income. Many taxpayers assume that overtime pay is now completely tax-free, but that is not always the case.
Not all overtime qualifies under the new rules, and even when it does, withholding doesn’t always reflect the final tax outcome. Federal rules and state rules can differ, and Illinois and Iowa do not always treat income the same way.
We’re already hearing from taxpayers on how confused they are. This usually happens because withholding, eligibility limits, or reporting rules were misunderstood.
Overtime income needs to be reviewed carefully before filing to avoid surprises later.
Senior Deduction Changes: Illinois vs. Iowa Matters
For seniors, even small tax law changes can have a big impact. Retirement income is not treated the same across all states, and Illinois and Iowa have important differences that affect how much tax is owed.
Social Security, pensions, annuities, and retirement account distributions all follow different rules. Filing status, age, and income levels can change whether a deduction applies or not.
We regularly see seniors miss deductions they qualify for or overpay because the rules weren’t applied correctly. These mistakes often aren’t caught until years later, if at all.
If you’re retired or approaching retirement, these changes should be handled carefully and with attention to both federal and state rules.
Common Filing Mistakes Under the New Tax Law
Here are some of the most common problems we’re already seeing:
Misreported tip income
Incorrect treatment of overtime pay
Filing status errors
Missing deductions for seniors
Relying on outdated or oversimplified online advice
These mistakes don’t always cause immediate rejection. More often, they lead to delayed refunds, adjustments, or IRS notices later in the year.
Why Local Tax Preparation Matters More Than Ever
As tax laws become more complex, filing correctly matters more than filing fast. Understanding how new rules apply to real people in Illinois and Iowa requires experience, not guesswork.
AmeriFile, in Moline & Davenport, has been locally owned since 1986 and has helped thousands of Quad Cities taxpayers navigate tax law changes, IRS letters, and complicated filing situations. Whether you file in person, use the drive-thru, or upload documents securely, the goal is the same — getting it right the first time.
Need Help With the New Tax Law?
If these changes apply to you, don’t rely on assumptions or social media advice. Small mistakes can lead to big delays.
AmeriFile Tax Centers are here to help Quad Cities taxpayers file with confidence, accuracy, and peace of mind. Offices in Moline, IL & Davenport, IA.