Hello, tax-savvy friends! At FindYourDeductions.com, we're all about helping you keep more of your hard-earned money by uncovering every tax deduction you're entitled to. With 2025 bringing some exciting new tax changes, we're here to break down the latest updates in a friendly, easy-to-understand way. Whether you're a senior, a parent, or someone paying state and local taxes, there's something new for you to explore. Let's dive into the key deductions and changes for 2025, sourced from reliable financial experts, so you can start planning your tax strategy with confidence!
What's New for 2025? Key Tax Changes to Watch
The tax landscape for 2025 has been reshaped by the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. This legislation makes permanent many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introduces fresh deductions that could lower your taxable income. Here's what you need to know, based on insights from the IRS, Tax Foundation, and other trusted sources:
Increased Standard Deduction
The standard deduction, which reduces your taxable income without itemizing, has gotten a slight boost for 2025. For single filers, it's now $15,750 (up from $15,000), and for married couples filing jointly, it's $31,500 (up from $30,000). This increase, adjusted for inflation, means fewer people may need to itemize, but it's still worth checking if itemizing could save you more.
Tip: If your deductions (like mortgage interest or charitable contributions) exceed these amounts, itemizing might be your best bet. Use our deduction calculator to compare!
New $6,000 Deduction for Seniors (Age 65+)
If you're 65 or older, you're in for a treat! The OBBBA introduces a temporary $6,000 "bonus" deduction for 2025 through 2028, on top of the existing extra standard deduction ($2,000 for singles, $1,600 per spouse for joint filers). This deduction applies whether you itemize or take the standard deduction, but it phases out for single filers with modified adjusted gross income (MAGI) over $75,000 ($150,000 for joint filers) and is gone entirely at $175,000 ($250,000 for joint filers).
Example: A 65-year-old single filer with $70,000 income could deduct $23,750 total ($15,750 standard + $2,000 extra + $6,000 bonus). A married couple, both 65, with $120,000 income could deduct $46,700!
Tip: If you're close to the phase-out threshold, consider strategies like Roth conversions or charitable distributions to lower your MAGI. Chat with a tax pro to see what works for you.
Higher State and Local Tax (SALT) Deduction Cap
The SALT deduction, which lets you deduct state and local income and property taxes, was capped at $10,000 under the TCJA. For 2025, the OBBBA raises this cap to $40,000 ($20,000 for married filing separately), with a 1% annual increase through 2029. However, the cap phases down to $10,000 for incomes over $500,000 ($250,000 for married filing separately).
Why it matters: If you live in a high-tax state like New York or California, this could make itemizing more attractive.
Tip: Re-evaluate whether itemizing makes sense, especially if you've been limited by the $10,000 cap in past years. Keep receipts for property taxes and state income tax payments to maximize this deduction.
No Tax on Tips and Overtime Deductions
If you earn tips or overtime pay, you're getting a break! For 2025–2028, the OBBBA allows a deduction for up to $12,500 in overtime pay (for non-exempt workers under the Fair Labor Standards Act) and an above-the-line deduction for tip income. These phase out for single filers with MAGI over $150,000 ($300,000 for joint filers).
Tip: Keep detailed records of your tips and overtime hours, as employers may need to report these separately. This deduction is a game-changer for servers, drivers, and other tipped workers!
Car Loan Interest Deduction
Buying a new car made in the U.S.? You can deduct up to $10,000 in car loan interest for 2025–2028, phasing out for incomes over $100,000 ($200,000 for joint filers).
Tip: Save your loan documents and verify the car's U.S. manufacturing status to claim this deduction. It's a nice perk if you're financing a new vehicle!
Child Tax Credit Boost
The Child Tax Credit (CTC) remains at $2,000 per qualifying child, but the OBBBA makes it permanent and increases it to $2,200 starting in 2025. The refundable portion stays at $1,700, adjusted for inflation.
Tip: If you have kids under 17, ensure you have their Social Security numbers ready when filing to claim this credit. It's a direct way to reduce your tax bill or boost your refund.
Deductions You Shouldn't Overlook
Beyond the new changes, don't forget these classic deductions that can still save you money in 2025:
Charitable Contributions: Non-itemizers can deduct up to $1,000 ($2,000 for joint filers) for cash donations, now permanently reinstated. Itemizers face a new 0.5% AGI floor, so track your donations carefully.
Medical Expenses: You can deduct unreimbursed medical expenses exceeding 7.5% of your AGI if you itemize. Keep receipts for doctor visits, prescriptions, and more.
Home Mortgage Interest: Deduct interest on up to $750,000 of mortgage debt for your primary or second home if you itemize.
529 Plan Contributions: Some states offer deductions for contributions to 529 education savings plans, and the OBBBA expands tax-exempt distributions for certain education expenses. Check your state's rules!
How to Find Your Deductions
Not sure where to start? Here's our friendly guide to uncovering deductions:
Gather Your Records: Collect receipts, bank statements, and pay stubs for expenses like medical bills, donations, and taxes paid. Use apps like Evernote or Shoeboxed to stay organized.
Know Your Filing Status: Your status (single, married, head of household) affects your standard deduction and eligibility for credits like the CTC.
Itemize vs. Standard Deduction: Run the numbers to see which saves you more. Our online tools can help you compare.
Talk to a Pro: A tax professional can spot deductions you might miss, especially with new rules like the senior bonus or SALT cap changes.
Stay Updated: Tax laws change, so bookmark FindYourDeductions.com for the latest tips and updates!
What's Next?
The 2025 tax changes offer new opportunities to reduce your tax bill, but they also come with phase-outs and temporary provisions. Start planning now by reviewing your income, expenses, and potential deductions. If you're over 65, earn tips, or live in a high-tax state, these changes could make a big difference. And don't forget to check out our other blog posts for tips on deductions like home office expenses or student loan interest—we've kept this post focused on fresh updates to avoid overlap.
Have questions about these deductions or need help finding more? Drop a comment below or try our deduction finder tool. Let's make tax season a breeze together!
Sources: IRS.gov, TaxFoundation.org, AARP.org, Fidelity.com, DuaneMorris.com. All information is current as of July 2025 and subject to change. Consult a tax professional for personalized advice.