There are several new tax deductions for 2025 that may apply to you. Here’s our summary below. And here’s where you can read additional info from the IRS too.
💰 1. “No Tax on Tips” — Deduction for Tip Income
You can subtract up to $25,000 of reported tips from your taxable income. You must work in a traditionally tipped job (e.g. servers, bartenders, salon staff - but see note below for a more expansive list).
What we need from you: Your total tips as reported on Form W2, box 7 or you can provide a separate statement from your employer with your total tips. If you receive tips as a self-employed individual, you will need to report those to us.
Important notes:
The official list of tipped occupations that qualify: www.IRS.gov/TippedOccupations
You cannot claim this deduction if your employer or you (as a self-employed person) are considered to be a specified service trade or business (SSTB) - most of these business types would not usually get tips anyway.
Tips may still be taxed by some states.
Married filing separate returns do not qualify. Also, the limit is $25,000 per tax return, not per person for joint filers.
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)
⏱️ 2. “No Tax on Overtime” — Deduction for Overtime Pay
You can deduct the portion of your pay that exceeds your regular rate (the “premium” part of overtime) from your taxable income. This can include up to $12,500 annual deduction for single filers or $25,000 for married filing jointly.
What we need from you: Your Form W2 does not report this separately in 2025 (but will in future years), so you will need to provide a report from your employer or your last paystub(s) for 2025 for us to calculate this deduction.
Important notes:
Only the extra pay above the regular wage rate is deductible.
You can claim it even if you don’t itemize your deductions.
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)
🚗 3. “No Tax on Car Loan Interest” — Deduction for Auto Loan Interest
You can deduct interest paid on a new vehicle loan. The deduction is up to $10,000 of interest paid on a qualified auto loan.
What we need from you: VIN and total interest paid in 2025 for any qualified vehicle (read below for more about what qualifies a vehicle)
Important notes:
Vehicle must be for personal use, and meet IRS qualifications (generally it must be U.S.-assembled).
Loan must be originated after December 31, 2024.
This can be claimed on multiple vehicles.
Lease payments do not qualify.
Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers)
✅ 4. Enhanced Deduction for Seniors
Individuals age 65+ can claim an extra deduction of $6,000 (or $12,000 for married filing jointly if both qualify).
Important notes:
This is in addition to other senior/standard deductions already available.
Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers)