Increased deduction for seniors

In addition to the standard deduction or itemized deduction, taxpayers 65 and older will be able to take an additional $6,000 off of their taxable income. 

The State and Local Tax (SALT) Deduction

provides a federal deduction for income and property taxes paid at the local and state level.

The SALT deduction cap bill changes include the following:

• Cap raised to $40,000 for incomes under $500,000 ($250,000 for Married Filing Separately).

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Overtime pay received deduction (No Tax on Overtime)

• Income eligible for the deduction is capped at $12,500 (Single) / $25,000 (Married Filing Jointly).

• Requires that employers designate overtime wages on the taxpayer’s Form W-2. A special rule in 2025 allows employers to approximate overtime.

 

Tips received deduction (No Tax on Tips)

The new “No Tax on Tips” law allows for a dollar-for-dollar deduction for a designated amount of tips earned by workers where tipping is customary. 

• Income eligible for the deduction is capped at $25,000.

• Additionally, the rules require the taxpayer receiving the tips to have a Social Security number valid for work and employer designation on a W-2 or similar form.

 

Form 1099-K reporting threshold raised to $20,000

Apps and Credit card processers issue you 1099-K form for money collected by you through their system. You will not get a 1099-K form is payments are less than $20,000. You’re still required to report the income even if you do not receive a form 1099-K showing the payments you received.

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Increased Child Tax Credit to $2,200 per child.

• Credit increased from $2,000 to $2,200 per child.

• A Social Security number will be required for the taxpayer (or at least one spouse for joint filers) who is claiming the credit and for the child.

• For additional non-tuition qualified expenses for K-12 costs, such as books, online learning materials, and tutoring fees.

• For additional post-secondary educational costs such as tuition, fees, books, supplies, and equipment for credentialed programs (e.g., testing fees in pursuit of a post-secondary credential or fees for continuing education requirements).

 

Car Loan Interest Deduction (No tax on car loan interest)

This new tax deduction could help your bottom line. If you’re purchasing a new car and taking out a loan.

The deduction is limited to $10,000 of qualified interest.

• Vehicle must have a “final assembly” in the U.S.

• Vehicle Identification Number (VIN) must be included on the tax return.

• You will receive a form from the lender to add to your taxes.

 

Clean Vehicle Credits repealed (EV tax credits)

Effective: September 30,2025  

The bill permanently eliminates the following clean vehicle credits for vehicles acquired after September 30, 2025:  

• New Clean Vehicle Credit

• Used Clean Vehicle Credit

• Qualified Commercial Clean Vehicle Credit (for businesses)

 

Residential energy credits repealed

Effective: 2025

The residential energy credits are generally terminated and will not be available for energy-efficient home improvements after 2025. This includes the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.