Tax Changes for 2025/2026 Filing
- SALT (State & Local Tax) deduction cap is temporarily increased to $40,000 for tax years 2025-2029 but gets phased out as your income exceeds $500,000 and is completely phased out when the income exceeds $600,000.
- Child Tax Credit has increased to $2,200 per qualifying child.
- Many of the clean energy tax credits expanded under the Inflation Reduction Act have been phased out or eliminated by the One Big Beautiful Bill Act with most ending in 2025.
- Senior Bonus Deduction – taxpayers aged 65 and older can claim an additional $6,000 deduction. This DOES NOT mean social security income is not taxable. This deduction has NOTHING to do with whether one collects social security or not. It is based on age and income and phases out once your income exceeds $75,000 when single or $150,000 when married.
- Overtime Pay Deduction – A deduction of up to $12,500 when single and $25,000 for joint filers is available for qualified overtime pay. It has the income phase out as the Senior Bonus Deduction does above. Your employer needs to provide you with this information for 2025.
- Tips Deduction – A deduction of up to $25,000 for qualifying tip income is available for certain occupations. The deduction begins to phase out at a modified adjusted gross income of $150,000 for single filers and $300,000 for joint filers.
- Car Loan Interest Deduction – You can deduct up to $10,000 in interest on a new US-assembled car. This is an “above-the-line” deduction, meaning you DO NOT need to itemize your deductions in order to qualify. The deduction begins to phase out at a modified adjusted gross income of $100,000 for single filers and $200,000 for joint filers. The vehicle must be for personal use and weigh less than 14,000 pounds.
- Permanent 100% Bonus Depreciation – There is a permanent restoration of the 100% bonus depreciation for most qualifying assets that have a useful life of 20 years or less.
We want to say these are highlights of the changes and provide the following link to the bill:
