A sweeping new tax law signed into law on the Fourth of July includes several provisions that could mean lower taxes for many Americans, though the financial benefits will depend on individual circumstances, according to Collin Dando, a certified public accountant in Wrangell.

“This is too complicated to answer and is really a case-by-case basis,” Dando said.

Depending on an individual’s income, the changes could reduce the withholding on their paychecks or could result in a larger tax refund next year.

“Workers benefiting from new deductions — such as tipped employees, overtime earners or seniors — should review their pay stubs and consult a tax professional to understand how the law affects their finances,” Dando cautioned people.

“The tax savings may come via a larger paycheck and not a larger tax refund,” he said. “This is not a bad thing, but something taxpayers should be aware of.”

President Donald Trump signed the legislation, which he called his “Big, Beautiful Bill,” on July 4, after politically contentious and close votes in the U.S. Senate and House.

In addition to preserving some tax cuts that were set to expire this year, the bill makes changes to the tax laws for overtime pay, increases a tax credit for parents of children, adds to a tax deduction for senior citizens, gives a tax break for people who receive tips at work, and allows some people to deduct the interest paid on car loans from their taxable income.

The deduction on interest payments on car and truck loans is a new feature in tax law. It is effective for 2025 through 2028 but applies only to new loans — vehicle loans issued before Jan. 1, 2025, are not eligible.

The new deduction will start to phase out if someone makes more than $100,000 a year, and applies only to personal-use vehicles, not commercial cars and trucks.

Seniors aged 65 and older can claim an additional $6,000 deduction against their taxable income, though that phases out for seniors reporting more than $75,000 a year in income. The new deduction, which is effective 2025-2028, is in addition to the standard deduction provided for all taxpayers.

Taxpayers will be allowed to avoid taxes on some tips and overtime pay for the same period of 2025-2028.

The most anyone can exclude of their tips from federal income tax is $25,000 a year, and it applies only to income received from jobs where tips are “customarily and regularly” paid. The Internal Revenue Service is required by October to publish a list of eligible occupations.

A portion of overtime wages will be exempt from taxation under the law, but only the “and half” part of “time-and-a-half” overtime earnings, with a tax-free limit of $12,500 per taxpayer per year.

The legislation grants parents an additional credit of $200 per child per year against their taxes.

It also increases the standard deduction for people who do not itemize on their tax return; the standard deduction increases $750, to $15,750 a year.