Effective 2025 - 2028

Individuals may deduct interest paid on a loan used to purchase a qualified vehicle for personal use.

Maximum annual deduction: $10,000.

Phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).

Lease payments do not qualify.

Interest must be paid on a loan that:

• Originated after December 31, 2024

• Was used to purchase a vehicle originally used by the taxpayer

• Was secured by a lien on the vehicle

• Was for a personal-use (nonbusiness) vehicle

• If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

A qualified vehicle is a car, minivan, van, SUV, pickup truck or motorcycle that:

• Has a gross vehicle weight rating of less than 14,000 pounds

• Underwent final assembly in the United States.

To verify final assembly, check one of these:

• • • The vehicle label at the dealership

    • The vehicle identification number (VIN)

    • The National Highway Traffic Safety Administration, NHTSA VIN Decoder (verify vehicle assembly location)

You must include the VIN on your return for any year you claim the deduction.

Individuals age 65 and older may claim an additional $6,000 deduction in addition to the standard deduction.

Applies per eligible individual (or $12,000 for a married couple if both spouses qualify).

Phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).

“Qualified tips” include voluntary cash or charged tips received from customers, including shared tips.

Maximum annual deduction is $25,000.

For self-employed individuals, deduction cannot exceed net income (before this deduction) from the trade or business where tips were earned.

Phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Self-employed in a Specified Service Trade or Business (SSTB) under Section 199A do not qualify.

SSTB: A specified service trade or business is any trade or business providing services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any other trade or business where the taxpayer receives fees, compensation, or other income for endorsing products or services, for the use of the taxpayer’s image, likeness, name, signature, voice, trademark, or any other symbols associated with the taxpayer’s identity, or for appearing at an event or on radio, television, or another media format. In addition, the trades or businesses of investing and investment management, trading or dealing in securities, partnership interests, or commodities are specified trades or businesses. 

The IRS includes influencers, actors, performers, etc. in this definition of SSTB, so while they count as being customarily tipped, they do NOT qualify for the tip deduction as an SSTB. 

Effective 2025 - 2028

Individuals may deduct the portion of qualified overtime pay that exceeds their regular rate of pay (for example, the “half” portion of “time-and-a-half”).

Overtime must be reported on Form W-2, Form 1099, another statement furnished to the individual, or directly by the individual.

Maximum annual deduction is $12,500 ($25,000 for joint filers).

Phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)

Telehealth and remote care services

• Telehealth and other remote care services can now be received before meeting a high-deductible health plan deductible.

• People can still contribute to their Health Savings Account (HSA) even after using telehealth before meeting the deductible.

• This rule is permanent for plan years starting on or after January 1, 2025.

Expanded eligibility for Bronze and Catastrophic plans

• Starting January 1, 2026, bronze and catastrophic health insurance plans are treated as HSA-compatible.

• This applies whether the plans are bought through an insurance exchange or not.

• This change makes more people eligible to contribute to an HSA, including individuals who previously could not because their plan did not meet the strict HDHP definition.

Direct primary care arrangements

• Beginning January 1, 2026, people enrolled in certain direct primary care (DPC) service arrangements may:

  • Contribute to an HSA if they otherwise qualify.

  • Use HSA funds tax-free to pay periodic DPC fees.

Overview of Trump Accounts (TA)

• Parents, guardians, or others can establish a TA for an eligible child.

• Trump Accounts cannot be funded before July 4, 2026.

• The federal government will make a one-time $1,000 contribution for each eligible child’s account (children born between Jan. 1, 2025, and Dec. 31, 2028)

• Authorized contributions from individuals and employers are allowed up to $5,000 per year.

• Employers can contribute up to $2,500 per year toward an employee’s or dependent’s TA without it counting as taxable income for the employee.

• Funds must be invested in certain mutual funds or exchange-traded funds that track a U.S. stock index such as the S&P 500.

Withdrawal and use

• Generally, money cannot be withdrawn before the year the child turns 18.

• After that point, the account is treated like a traditional IRA with similar tax rules.

Essentially, these accounts are similar to UGMA/UTMA accounts that already exist, but are tax advantaged like an IRA for your children. The key differences are:

• The governemnt will make a one-time contribution of $1,000 to the TA

• TA's have restricted types of investments (mutual funds, ETFs, see above)

• TA's have a penalty if withdrawn early, similar to an IRA

• TA's are tax advantaged rather than gains being taxable yearly

If you have a child, it may be beneficial to create one of these accounts solely for the governement contribution, even if you do not plan to add anything to the account in the future.

Beginning tax years after December 31, 2024, up to $5,000 (indexed for inflation) of the adoption credit may be refundable.

Any credit amount carried forward from prior years cannot be used to calculate the refundable portion.

Overview of the credit

• Beginning January 1, 2027, individual taxpayers may be able to claim a federal tax credit for certain donations they make.

• The credit applies to cash contributions to Scholarship Granting Organizations (SGOs).

• An SGO is a nonprofit that awards scholarships to help students pay for elementary and secondary education.

• The tax credit is nonrefundable, which means it can reduce your federal tax bill but will not result in a refund if the credit is larger than what you owe.

• The maximum credit an individual can claim each year is $1,700.

Overview of credit expirations

The Act accelerates the end of several clean vehicle credits:

• New Clean Vehicle Credit (30D): Not allowed for any vehicle acquired after September 30, 2025

• Used Clean Vehicle Credit (25E): Not allowed for any vehicle acquired after September 30, 2025.

• Qualified Commercial Clean Vehicle Credit (45W): The credit will not be allowed for any vehicle acquired after September 30, 2025.

Overview of credit expirations

The Act accelerates the end of the following home and residential energy credits:

• Energy Efficient Home Improvement Credit (25C): Not allowed for any property placed in service after December 31, 2025.

• Residential Clean Energy Credit (25D): Not allowed for any expenditures made after December 31, 2025.