Tax Law changes made by the Big Beautiful Tax Bill - effective 2025:
Here's a summary of important changes to the tax laws affecting individual taxpayers. Most new laws represent good news for taxpayers. Previously existing deductions and credits remained in place while some such as credit for the purchase of electric vehicles were in process of being phased out. We would be happy to discuss how these impact your specific situation during our appointment or at any other time throughout the year.
State, Local Income and Property Tax Deduction Increased
Finally, some relief for many living in high tax states! You may now deduct up to $40,000 of the combined state and local income taxes plus property and real estate taxes - - increased from $10,000. Income limits apply.
Standard Mileage Rates Increase
If you drive your car for business in a qualified manner, the mileage deduction rate has increased. This is good news given that gas prices went down.
-Business Driving - $0.70 per mile
-Medical related driving - $0.21 per mile
-Charitable services related driving - $0.14 per mile
New Car Purchase Loan Interest Deduction
You may deduct up to $10,000 of interest paid on a new car loan as a separate deduction from any other car expenses. Income limits apply.
Newborn Child Savings Account
Named the "Trump (Savings) Account" - the Federal government will contribute $1,000 (non-taxable) to a qualified account that you open for your newborn baby. Moreover, earnings such as interest and dividends on these accounts are also not taxable - - this is free money!
No Tax on Tips
Up to $25,000 of tips income received is non-taxable. Income limits apply.
No Tax on Overtime
Up to $25,000 for taxpayers filing jointly ($12,500 for single taxpayers) is non-taxable. Subject to income limits.
Senior Deduction
Tax deduction of up to $6,000 for each person 65 and older (max $12,000 for persons filing jointly). Subject to income limits. This serves as an added benefit and should help offset a portion of any taxable Social Security benefits and other taxable income.
Standard Deduction Increased
This deduction is available to every qualifying taxpayer.
Single - $15,750
Married Jointly - $31,500
Head of Household - $23,625
Income limits apply.
Other Beneficial Changes
- IRA Catch-Up Contributions - Increased to $11,750 for 60-63 year-olds and $8,000 for 50+ year-olds.
- 401K, 403B and some 457 Retirement Plan Contribution Limits increased.
- Eligible Income Limits for Allowed Contributions to Traditional and Roth IRA contributions were also increased.
- FSA & HSA Health Accounts deductible contribution limits increased.
Foreign Earned Income
Good news - the amount of income earned while working full time or substantially outside the U.S. that is not subject to U.S. taxation increased to $130,000. Housing expense allowance also increased to $39,000+.
Depreciation of Business Capital Assets
First year depreciation allowance was increased for certain capital assets.
Crypto Currency Transactions
Brokers will now be required to formally track and report Crypto Currency that you sell from your portfolio (form 1099-DA).
Here's a summary of important changes to the tax laws affecting individual taxpayers. Most new laws represent good news for taxpayers. Previously existing deductions and credits remained in place while some such as credit for the purchase of electric vehicles were in process of being phased out. We would be happy to discuss how these impact your specific situation during our appointment or at any other time throughout the year.
State, Local Income and Property Tax Deduction Increased
Finally, some relief for many living in high tax states! You may now deduct up to $40,000 of the combined state and local income taxes plus property and real estate taxes - - increased from $10,000. Income limits apply.
Standard Mileage Rates Increase
If you drive your car for business in a qualified manner, the mileage deduction rate has increased. This is good news given that gas prices went down.
-Business Driving - $0.70 per mile
-Medical related driving - $0.21 per mile
-Charitable services related driving - $0.14 per mile
New Car Purchase Loan Interest Deduction
You may deduct up to $10,000 of interest paid on a new car loan as a separate deduction from any other car expenses. Income limits apply.
Newborn Child Savings Account
Named the "Trump (Savings) Account" - the Federal government will contribute $1,000 (non-taxable) to a qualified account that you open for your newborn baby. Moreover, earnings such as interest and dividends on these accounts are also not taxable - - this is free money!
No Tax on Tips
Up to $25,000 of tips income received is non-taxable. Income limits apply.
No Tax on Overtime
Up to $25,000 for taxpayers filing jointly ($12,500 for single taxpayers) is non-taxable. Subject to income limits.
Senior Deduction
Tax deduction of up to $6,000 for each person 65 and older (max $12,000 for persons filing jointly). Subject to income limits. This serves as an added benefit and should help offset a portion of any taxable Social Security benefits and other taxable income.
Standard Deduction Increased
This deduction is available to every qualifying taxpayer.
Single - $15,750
Married Jointly - $31,500
Head of Household - $23,625
Income limits apply.
Other Beneficial Changes
- IRA Catch-Up Contributions - Increased to $11,750 for 60-63 year-olds and $8,000 for 50+ year-olds.
- 401K, 403B and some 457 Retirement Plan Contribution Limits increased.
- Eligible Income Limits for Allowed Contributions to Traditional and Roth IRA contributions were also increased.
- FSA & HSA Health Accounts deductible contribution limits increased.
Foreign Earned Income
Good news - the amount of income earned while working full time or substantially outside the U.S. that is not subject to U.S. taxation increased to $130,000. Housing expense allowance also increased to $39,000+.
Depreciation of Business Capital Assets
First year depreciation allowance was increased for certain capital assets.
Crypto Currency Transactions
Brokers will now be required to formally track and report Crypto Currency that you sell from your portfolio (form 1099-DA).
