With 2025 winding down, it is time to start preparing for tax filing season The new tax bill signed in July 2025 contains some provisions which apply to the 2025 tax return. You should be aware of these changes so that you can take advantage of them if they apply to you.

No Tax on Car Loan Interest

Interest paid on a car loan may be deducted in tax years 2025 through 2028. The maximum amount of interest which may be deducted is $10,000. In order to claim the interest deduction, the following requirements must be satisfied:

• The interest sought to be deducted must be from a loan used to purchase the vehicle. Interest on a vehicle lease does not qualify for the deduction.
• The loan must have originated after December 31, 2024.
• The vehicle must have been purchased for personal, and not business or commercial, use.
• The use of the vehicle must have originated with the taxpayer. Interest on a loan used to purchase a used vehicle does not qualify for the deduction.
• The lender must secure the loan by imposing a lien on the vehicle purchased.
• The vehicle purchased must be a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds.

• The vehicle must have undergone final assembly in the United States. In order to determine if the vehicle has been assembled in the United States the taxpayer may rely on the location of final assembly listed on the vehicle information label attached to the vehicle or on the vehicle’s plant of manufacture as reported in the vehicle identification number (VIN). Taxpayers may use the following link to determine the vehicle’s place of manufacture: https://www.nhtsa.gov/vin-decoder
• The vehicle’s VIN must be included in the return for any year in which the interest deduction is claimed.
• The deduction is available to taxpayers who itemize deductions and to those who take the standard deduction.
• The deduction phases out for taxpayers whose modified adjusted gross income exceeds $100,000 ($200,000 for joint filers).
• Lenders must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.
• If a vehicle loan which qualifies for the deduction is refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

Deductions for Seniors

Individuals 65 and over may deduct an additional $6,000 over and above any standard deduction to which they may be entitled under the law. The deduction is available for tax years 2025 through 2028. In order to claim the interest deduction, the following requirements must be satisfied:

• Taxpayers claiming the deduction must be 65 on or before the last day of the taxable year.
• Married individuals must file jointly to claim the deduction, even if only one of the spouses is claiming the deduction.
• Married individuals may each claim the $6,000 deduction, if each spouse qualifies for the deduction.
• The return must include the social security number of the person(s) claiming the deduction.
• The deduction is available to taxpayers who itemize deductions and to those who take the standard deduction.
• The deduction phases out for taxpayers whose modified adjusted gross income exceeds $75,000 ($150,000 for joint filers).

No Tax on Overtime

Individuals who receive qualified overtime compensation may deduct the amount of pay that exceeds their regular rate of pay required to be paid by the Fair Labor Standards Act, that is, the time and a half portion of their pay. The deduction is available for years 2025 to 2028.  In order to claim the overtime pay deduction, the following requirements must be satisfied:

• The compensation must be reported on a Form W-2, 1099 or other specified statement furnished to the taxpayer. Employers are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
• The maximum amount of the deduction is $12,500 or $25,000 for joint filers.
• Married individuals must file jointly to claim the deduction, even if only one of the spouses is claiming the deduction.
• The return must include the social security number of the person(s) claiming the deduction.
• The deduction is available to taxpayers who itemize deductions and to those who take the standard deduction.
• The deduction phases out for taxpayers whose modified adjusted gross income exceeds $150,000 ($300,000 for joint filers).

No Tax on Tips

Employees and self-employed persons may deduct qualified tips received in occupations that the IRS has listed as an occupation in which tips are customarily and regularly received. The deduction is available for years 2025 to 2028.  In order to claim the deduction, the following requirements must be satisfied:

• The taxpayer claiming the deduction must be in an occupation which regularly and customarily receives qualified tips. These occupations are classified as being in eight categories:
• Beverage and Food Service

• Entertainment and Events
• Hospitality and Guest Services
• Home Services
• Personal Services
• Personal Appearance and Wellness
• Recreation and Instruction
• Transportation and Delivery

For more specific information regarding the qualifying occupations see:

https://www.federalregister.gov/documents/2025/09/22/2025-18278/occupations-that-customarily-and-regularly-received-tips-definition-of-qualified-tips

• The tips must be paid in cash or cash equivalent, such as check, credit card, debit card, gift card, tangible or intangible tokens that are readily exchangeable for a fixed amount in cash, or another form of electronic settlement or mobile payment application denominated in cash. Digital assets are generally excluded.
• Tips must be received from customers or, in the case of an employee, through a mandatory or voluntary tip-sharing arrangement, such as a tip pool.
• Tips must be paid voluntarily by the customer and not be subject to negotiation. Service charges imposed on customers by the employer do not qualify as tips even if the funds are distributed to the workers.
• Amounts received for illegal activity, prostitution services, or pornographic activity do not qualify as tips.
• The tips must be reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or are reported directly by the individual on Form 4137 and must show the occupation of the person receiving the tips.

• The return must include the social security number of the person(s) claiming the deduction.
• Married individuals must file jointly to claim the deduction, even if only one of the spouses is claiming the deduction.
• The maximum annual deduction for qualified tips is $25,000. If the taxpayer is self-employed, the deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
• Self-employed individuals in a Specified Service Trade or Business (SSTB), as specified in IRC §199A, and employees whose employer is in an SSTB, are not eligible for the deduction
• The deduction is available to taxpayers who itemize deductions and to those who take the standard deduction.
• The deduction phases out for taxpayers whose modified adjusted gross income exceeds $150,000 ($300,000 for joint filers).