Tax Law Changes
Tax laws changes can be confusing (and frustrating). Let’s break this down. Please reach out if you need further explanation.
2025
No tax on car loan interest
1. Individuals may deduct up to $10,000 per year from 2025-2028 for qualified new vehicles (car, minivan, van, SUV, pickup truck or motorcycle) with a gross vehicle rating of less than 14,000 pounds that has undergone final assembly in the United States
2. Loan must have originated after 12/31/24 and be secured by a lien on the vehicle
3. Vehicle must be for personal use only
4. Deduction phases out for taxpayers with modified adjusted gross income of more than $100,000 ($200,000 for joint filers)
5. Information needed to claim – Vehicle VIN#, interest paid during tax year
Deduction for seniors
1. Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000(or $12,000 total for eligible taxpayers). This new deduction is in addition to the current additional standard deduction for seniors under existing law and available for itemizing and non-itemizing taxpayers
2. Taxpayer must attain age 65 on or before the last day of the year
3. Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers) and is not available to married taxpayers that file separately
No tax on tips
Effective for 2025 through 2028, employees and self-employed individuals may deduct up to $25,000 for qualified tips received in occupations listed by the IRS as customarily and regularly receiving tips such as:
Food Service
Entertainment and Events
Hospitality and Guest Services
Home Services
Personal Services
Personal Appearance and Wellness
Recreation and Instruction
Transportation and Delivery
1. Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers) and is not available to married taxpayers that file separately.
2. Deduction is available for both itemizing and non-itemizing taxpayers
No tax on overtime
1. Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct up to $12,500 ($25,000 for joint filers) the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act (FLSA) and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual
2. Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers) and is available for both itemizing and non-itemizing taxpayers. Deduction is not available to married taxpayers that file separately
No tax on car loan interest
1. Individuals may deduct up to $10,000 per year from 2025-2028 for qualified new vehicles (car, minivan, van, SUV, pickup truck or motorcycle) with a gross vehicle rating of less than 14,000 pounds that has undergone final assembly in the United States
2. Loan must have originated after 12/31/24 and be secured by a lien on the vehicle
3. Vehicle must be for personal use only
4. Deduction phases out for taxpayers with modified adjusted gross income of more than $100,000 ($200,000 for joint filers)
5. Information needed to claim – Vehicle VIN#, interest paid during tax year
Deduction for seniors
1. Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000(or $12,000 total for eligible taxpayers). This new deduction is in addition to the current additional standard deduction for seniors under existing law and available for itemizing and non-itemizing taxpayers
2. Taxpayer must attain age 65 on or before the last day of the year
3. Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers) and is not available to married taxpayers that file separately
No tax on tips
Effective for 2025 through 2028, employees and self-employed individuals may deduct up to $25,000 for qualified tips received in occupations listed by the IRS as customarily and regularly receiving tips such as:
Food Service
Entertainment and Events
Hospitality and Guest Services
Home Services
Personal Services
Personal Appearance and Wellness
Recreation and Instruction
Transportation and Delivery
1. Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers) and is not available to married taxpayers that file separately.
2. Deduction is available for both itemizing and non-itemizing taxpayers
No tax on overtime
1. Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct up to $12,500 ($25,000 for joint filers) the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act (FLSA) and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual
2. Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers) and is available for both itemizing and non-itemizing taxpayers. Deduction is not available to married taxpayers that file separately