New 2025 Tax Deductions: Are You Missing Out?
The passage of the **One, Big, Beautiful Bill Act (OBBBA)** by Congress brought significant tax changes, many of which take effect for the **2025 tax year** (filed in early 2026). These changes are crucial for U.S. taxpayers, as they impact everything from your Standard Deduction to new write-offs for certain types of income and expenses. Here is a breakdown of the key deductions you need to know about.
The Inflation Adjustment: Higher Standard Deduction
A primary feature of the 2025 tax year is the inflation-adjusted increase to the Standard Deduction, making it more advantageous for millions of Americans to claim this deduction rather than itemize.
| Filing Status | 2025 Standard Deduction Amount (Up from 2024) |
|---|---|
| Married Filing Jointly / Surviving Spouse | $31,500 |
| Head of Household | $23,625 |
| Single / Married Filing Separately | $15,750 |
This increase means more of your income is shielded from federal tax right off the top.
Brand New Temporary Deductions for 2025–2028
The OBBBA introduced several new, temporary deductions (currently set to expire after 2028) aimed at specific groups of workers and taxpayers:
1. Deduction for Qualified Tips:
Individuals working in occupations that customarily receive tips (e.g., service industry) can now claim a deduction for certain qualified tips reported on a Form W-2 or 1099. This deduction is available to **both itemizers and non-itemizers.**2. Deduction for Overtime Compensation:
Workers earning overtime compensation required by the Fair Labor Standards Act (FLSA) may deduct the **premium portion** of that pay (i.e., the "half" in time-and-a-half). This is also available to both itemizers and non-itemizers, up to certain income limits ($12,500 for single filers, $25,000 for joint).3. Deduction for Qualified Passenger Vehicle Loan Interest:
A new deduction is available for interest paid on a loan used to purchase an **applicable passenger vehicle** in 2025. This allows taxpayers to deduct the interest paid on new car loans for personal use, again available to both itemizers and non-itemizers.
Major Benefit for Seniors (Age 65+)
The new law introduced a separate, powerful deduction for seniors that stacks on top of the standard deduction:
New Senior Deduction ($6,000/$12,000)
Individuals age 65 and older may claim an **additional deduction of $6,000** ($12,000 for married couples if both qualify). This deduction is available to both itemizing and non-itemizing taxpayers, but it begins to phase out for those with a Modified Adjusted Gross Income (MAGI) over $75,000 (single) or $150,000 (joint).
This deduction is separate from the existing, smaller "additional standard deduction" already available for seniors and the blind.
Important: Itemized Deductions Change (SALT Cap)
For taxpayers who still itemize, the cap on the deduction for State and Local Taxes (SALT) has been temporarily increased, primarily benefiting high-income earners in high-tax states. The new, increased caps are:
- **Married Filing Jointly:** Up to $40,000 (Increased from $10,000).
- **Married Filing Separately:** Up to $20,000 (Increased from $5,000).
However, this increased deduction is also subject to income phase-outs, starting at $500,000 MAGI for joint filers.
Tax codes change constantly. Let us help you ensure you are maximizing all available 2025 deductions and credits.
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