NEW TAX LAW UPDATES 2025

"NO TAX ON TIPS" DEDUCTION

Eligible workers can deduct up to $25,000 of qualified tip income from their federal taxable income (effective 2025–2028).

NEW CAR LOAN INTEREST DEDUCTION

A new, temporary tax deduction for personal car loan interest is available for qualifying vehicles purchased from 2025 through 2028, as part of the One Big Beautiful Bill Act. You can deduct up to $10,000 in interest per year.

CHILD TAX CREDIT

The credit is increased to $2,200 per qualifying child.

"NO TAX ON OVERTIME" DEDUCTION

Workers can deduct qualified overtime pay (the "half" portion of time-and-a-half) up to $12,500 for single filers or $25,000 for joint filers (effective 2025–2028).

TRUMP ACCOUNTS FOR KIDS

The Working Families Tax Cuts allows parents, guardians and other authorized individuals to establish a new type of individual retirement account for their children, called Trump Accounts. The account is for a child who has not turned age 18 before the end of the calendar year in which the election is made and has a valid Social Security number.

The account features a pilot program contribution of $1,000 for children born between Jan. 1, 2025, and Dec. 31, 2028, and who are U.S. citizens with a valid Social Security number.

SALT DEDUCTION CAP RAISE

In 2025, the federal State and Local Tax (SALT) deduction cap is rising from $10,000 to $40,000 for individuals and joint filers, and to $20,000 for married couples filing separately. This change is part of the "One Big Beautiful Bill Act" (OBBBA), which was signed into law in July 2025

SENIOR DEDUCTION INCREASE

Individuals 65 and older can claim an additional $6,000 deduction (or $12,000 for joint filers) for 2025–2028, on top of the standard deduction.

STANDARD DEDUCTION INCREASE

The standard deduction for 2025 is $31,500 for married couples filing jointly, $15,750 for single filers, and $23,625 for heads of household.