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- Freelance, self-employed and gig workers: Here are 5 key provisions you should know about in the new tax law</p>
<p>Faith FousheeJuly 17, 2025 at 2:55 PM</p>
<p>If you deliver for DoorDash or run your own freelance business, your taxes may look different under the massive new tax law that President Donald Trump signed into law on July 4.</p>
<p>Freelance, self-employed and gig workers already juggle multiple clients and unpredictable income streams, which can add an extra layer of stress during tax season compared to a traditional W-2 job. But this time, the changes could work in your favor — as long as you know what to look for.</p>
<p>"There's something in here for everybody, regardless of your income class. But it's important to understand how these apply and how to use them," says David De Jong, a tax attorney at law firm Stein Sperling.</p>
<p>Many of the new tax laws take effect for your 2025 return, which you'll file in 2026. These updates could lower your tax bill and increase your deductions, so here's what to look for and how to make your next tax season a little smoother.</p>
<p>1. Lower tax rates are here to stay</p>
<p>The income tax rates that were first introduced under the 2017 Tax Cuts and Jobs Act (TCJA) were slated to expire at the end of this year, which would have meant higher tax bills for most taxpayers. But the new law made those tax rates permanent.</p>
<p>Tax rates before the TCJA</p>
<p>Tax rates in effect now</p>
<p>10 percent</p>
<p>10 percent</p>
<p>15 percent</p>
<p>12 percent</p>
<p>25 percent</p>
<p>22 percent</p>
<p>28 percent</p>
<p>24 percent</p>
<p>33 percent</p>
<p>32 percent</p>
<p>35 percent</p>
<p>35 percent</p>
<p>39.6 percent</p>
<p>In other words, instead of reverting to higher pre-2017 rates, lower tax rates remain in place going forward.</p>
<p>"These tax rates continue on an indefinite basis. I like to say indefinite rather than permanent, because nothing in law is truly permanent," De Jong says. "It's permanent until it's changed again."</p>
<p>Learn more: Current federal tax brackets and income tax rates</p>
<p>For freelancers who often experience feast or famine cycles, this newfound tax-law stability makes it easier to plan their estimated quarterly taxes and avoid big surprises at tax time. It also means gig workers continue to keep more of each paycheck, making cash flow a little smoother throughout the year.</p>
<p>2. Qualified business income deduction is permanent</p>
<p>The qualified business income (QBI) deduction lets freelancers and self-employed workers deduct up to 20 percent of qualified income. The new tax law makes this deduction permanent, or "indefinite," as De Jong puts it. (Before the new tax law made it permanent, this tax provision was slated to expire at the end of this year.)</p>
<p>"This deduction is one of the biggest benefits for self-employed individuals and can be substantial annual savings," De Jong says.</p>
<p>If you run a business as a sole proprietor, limited liability company (LLC), or S corporation, you likely are eligible to continue using this deduction to reduce taxable income.</p>
<p>For example, if your QBI is $80,000, you may be able to deduct up to $16,000. This reduces the total income amount that's taxed and helps you save money each year.</p>
<p>3. New deduction for tip income</p>
<p>Starting in the 2025 tax year, freelancers and gig workers who earn tips can deduct up to $25,000 in qualified tip income and up to $12,500 in qualified overtime pay. Qualified tips are those you receive directly from customers or through a tip pool, and they must be voluntary.</p>
<p>De Jong says the specific details are not yet completely clear and more guidance from the IRS is needed. He gave the example of restaurants where the gratuity is already included on the bill. In these cases, tips may not be considered voluntary and wouldn't qualify for the deduction. However, it may qualify if a receipt says you can adjust the percentage.</p>
<p>If you rely on tips, this deduction could significantly reduce your taxable income, but De Jong recommends watching for IRS rules to confirm which tips qualify. Keep in mind that tips and overtime pay are still subject to Social Security and Medicare tax, so these types of income aren't completely tax-free.</p>
<p>Learn more: No tax on tips and overtime: Here's how your taxes may shrink</p>
<p>4. Higher 1099 reporting thresholds</p>
<p>The new tax law increased the threshold for when 1099 forms must be issued, including the 1099-MISC and 1099-NEC, to $2,000 from $600.</p>
<p>Also, the threshold for 1099-K forms (for payments through apps like PayPal or Venmo) has been reverted to the older rule, which allows for $20,000 and 200 transactions before reporting is required.</p>
<p>But these new rules technically only affect the companies that issue the forms to you.</p>
<p>"A common misconception is that if you don't get a 1099, you don't have to report that income," De Jong says. "But you're still obligated to report all income you earn. The form is just a tool to help the IRS verify it."</p>
<p>The increased reporting threshold means you might receive fewer forms, especially if you work on multiple small projects or occasional gigs. It's still important to track and report every dollar you make to avoid risking penalties later.</p>
<p>Get started: Match with an advisor who can help you achieve your financial goals</p>
<p>5. The standard deduction is higher</p>
<p>The new tax law made two changes related to the standard deduction:</p>
<p>The new law made permanent the much higher standard deduction that was put in place by the TCJA way back in 2017.</p>
<p>The new law also slightly increased the standard deduction amount for 2025 to $15,750 for single filers, $23,625 for heads of household, and $31,500 for joint filers.</p>
<p>"The higher standard deduction makes it easier for freelancers to reduce taxable income automatically without worrying about tracking every small expense," De Jong says.</p>
<p>Keep in mind, though, that freelancers and small-business owners have to deal with two main types of expenses: Those that reduce their business income, and those that could be counted as itemized deductions.</p>
<p>Every taxpayer, no matter how they earn their money, must choose between claiming the standard deduction or itemizing their deductions. That's a decision that's made on Form 1040, the main income tax form.</p>
<p>But no matter what the standard deduction is and no matter whether you itemize or claim the standard deduction, you'll still want to reduce your freelance income by qualified business expenses.</p>
<p>That process generally happens on Schedule C: You enter your gross business income and then reduce it by your business expenses. The result of that calculation ends up on your Form 1040, which is where you then choose whether to itemize your personal expenses or claim the standard deduction.</p>
<p>Itemizing deductions doesn't make sense for any taxpayer without large qualified expenses, such as mortgage interest, property taxes (deductible as part of the SALT deduction), charitable contributions or medical expenses.</p>
<p>A higher standard deduction means you can keep more of your income and makes filing simpler.</p>
<p>Learn more: Standard deduction vs. itemized deductions: Pros, cons and how to decide</p>
<p>Other tax perks to know about</p>
<p>While the tax-law changes above may impact most freelancers and gig workers, the new law also includes other benefits depending on your age, family situation and other factors.</p>
<p>Expanded child tax credit: The child tax credit has increased to $2,200 per child under age 17, and is adjusted for inflation each year. This can help reduce taxes for freelancers and gig workers with dependents.</p>
<p>Vehicle loan interest deduction: You may be able to deduct up to $10,000 in interest on a personal auto loan if the vehicle assembly was finished in the U.S. This deduction is available from 2025 through 2028 and phases out at income of $100,000 for single filers and $200,000 for joint returns.</p>
<p>Non-itemizer charitable deduction: Starting in 2026, there's a new charitable deduction worth up to $1,000 in cash donations if you're a single filer or up to $2,000 if you file married filing jointly — and you don't have to itemize to claim this tax benefit.</p>
<p>New "bonus" deduction for older taxpayers: This new bonus deduction for taxpayers aged 65 and older is worth up to $6,000 for single filers and $12,000 for those who are married filing jointly. It's in effect in 2025 and through 2028, but there are income limits.</p>
<p>Higher cap on the state and local tax (SALT) deduction: The SALT deduction lets people who itemize their deductions write-off some of their state and local taxes, such as property taxes and state income tax. The cap on this deduction has been raised to $40,000, from $10,000, for tax years 2025 through 2029.</p>
<p>Learn more: State tax rates: Check your state</p>
<p>Next steps for freelancers and gig workers</p>
<p>Here's how to prepare for tax season and make the most of these tax-law changes:</p>
<p>Adjust your estimated quarterly payments: Your tax liability may be lower than in previous years, thanks to the new tax deductions and lower tax rates. De Jong recommends paying in four equal payments that total your prior year's tax liability to avoid penalties. If your income was higher last year, he suggests paying 110 percent of your prior year tax liability.</p>
<p>Keep records of income and tips: Accurate records make it easier to claim deductions like the new tip income tax breaks. Good documentation also supports your case if the IRS asks for proof of your reported income.</p>
<p>Check your state tax rules: Some states don't automatically follow federal changes. Depending on where you live, certain new deductions or rate changes may not apply to your state tax return. Review your state tax rules or consult a tax advisor to avoid surprises.</p>
<p>Watch for IRS guidance: The IRS will clarify details on the new deductions, especially for tip and overtime pay. Staying helps you know what you qualify for and avoid mistakes that could lead to penalties or an audit.</p>
<p>Bottom line</p>
<p>While these tax changes offer valuable opportunities to save money, remember that tax rules aren't permanent. The new tax deductions for tips and overtime and vehicle loans are set to expire in 2028, unless renewed. The expanded SALT deduction cap is scheduled to revert to its lower limit in 2030.</p>
<p>"A lot of things get extended… 2028 is an election year, so perhaps both parties will not want to lose voters who receive tips and overtime," De Jong says. "Like everything else in the tax law, most provisions come and go at various points in time."</p>
<p>Your income level, business type and location will determine which of the new tax law's provisions apply to you. It's a good idea to work with a tax advisor who understands your freelance business and gig work. A tax advisor or certified public accountant (CPA) can help you understand which deductions you can take, track potential phaseouts and plan ahead for the next tax season.</p>
<p>Learn more: 5 tips to find the best tax preparer for you</p>
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