JC Elgin – Attorney, Accountant, Researcher

It is the most wonderful time of the year for estate planners and accountants. The calm before the storm. Truly, though, there is not a calm — many folks want to get a deal or reorganization complete before the start of the new year. I am no exception. I decided to redo the accounting software I use for fiduciary accounting for 2026. My free time between Christmas treat sugar comas has been spent configuring the new system.

Tax season is gearing up, and there have been a lot of changes this year. I want you to be aware of some of the most important changes that may affect you and your family. If you feel like the tax landscape has shifted beneath your feet this year, you aren’t imagining things. With the signing of the One Big Beautiful Bill Act (OBBBA) this past July, the 2025 tax year has become one of the most unique in recent memory.

As we approach the December 31st finish line, we are looking at a mix of old rules made permanent, brand new deductions for workers, and some urgent deadlines for homeowners. Whether you are an hourly worker, a retiree, or a homeowner in a high-tax state, the OBBBA has likely altered your tax picture.

Here is what you need to know to finish 2025 strong and prepare for filing in early 2026.

The “Working Class” Deductions: Tips and Overtime

Perhaps the most discussed headlines from the OBBBA are the new targeted deductions for specific types of income. If you work in the service industry or put in extra hours, pay close attention.

No Tax on Tips (up to $25k): For the 2025 tax year, you can deduct up to $25,000 of qualified tip income. This is an “above-the-line” deduction, meaning you can claim it even if you take the standard deduction.

The Overtime Break: Similarly, there is now a deduction for qualified overtime pay. Single filers can deduct up to $12,500 of overtime wages, while married couples filing jointly can deduct up to $25,000.

Planning Tip: Ensure your employer has correctly categorized this income on your W-2. You will need clear documentation of what qualifies as “overtime” (generally hours over 40/week under FLSA rules) to claim this deduction when you file.

A reprieve for Homeowners: The SALT Cap Lifts

For years, taxpayers in states with higher property and income taxes (like NY, NJ, CA) were limited to deducting just $10,000 of their State and Local Taxes (SALT). The OBBBA has raised this cap significantly to $40,000 for the 2025 tax year.

Why this matters: If you previously stopped itemizing because the $10,000 cap made the Standard Deduction more attractive, the new $40,000 limit might flip the math back in favor of itemizing. Gather your property tax bills and state income tax records early!

Drivers: The Auto Loan Interest Deduction

In a move to support the auto industry and car buyers, the OBBBA introduces a deduction for interest paid on auto loans for new, US-assembled vehicles purchased in 2025.

The Limit: You can deduct interest on up to $10,000 of debt.

The Catch: This benefit phases out for higher earners (starting at $100k MAGI for singles / $200k for couples).

Families and Seniors: Credits and Deductions

Child Tax Credit Boost: The Child Tax Credit (CTC) has been bumped up to $2,200 per qualifying child.

Senior Bonus: If you are age 65 or older, there is a new additional standard deduction of $6,000. This is a significant relief for retirees, effectively shielding a larger portion of pension or Social Security income from taxes.

The “Green” Cliff

While the OBBBA added many benefits, it also signaled the end for others to offset costs.

Home Energy Credits: The OBBBA accelerates the expiration of the Energy Efficient Home Improvement Credit (25C). Home energy credits now expire at the end of 2025.

EV Credits: Note that credits for new Clean Vehicles were eliminated as of September 30, 2025. If you bought a car after that date, do not count on the old $7,500 credit.

The Standard Deduction is Higher (and Permanent)

The OBBBA effectively locked in the structure of the 2017 Tax Cuts and Jobs Act (TCJA). The standard deduction for 2025 has increased to:

$15,750 for Singles

$31,500 for Married Filing Jointly

With the higher standard deduction plus the new ability to deduct Tips/Overtime/Auto Interest without itemizing, many of you will still find the Standard Deduction to be the easiest path—unless that new $40k SALT cap pushes you over the edge.

Conclusion

The OBBBA was a massive piece of legislation, and the 2025 tax forms will look different because of it. If you have complex income sources, this is the year to work with a tax professional to ensure you capture every new break available to you.

As always, I remain available to assist in your tax preparation and planning needs. Give me a call today 239-955-3175 to schedule a consultation.