{"id":1101,"title":"Maximize Your Return: New and Overlooked 2025 Tax Breaks","slug":"maximize-your-return-new-and-overlooked-2025-tax-breaks","lang":"en","description":"The tax landscape for 2025 brings some of the biggest changes in years, thanks to new federal legislation known as the One Big Beautiful Bill Act and routine IRS updates. These developments introduce fresh deductions, expand existing ones, and also create new areas where taxpayers commonly miss out on savings.","content":"

Knowing what’s changed and what many filers overlook can help you keep more of your money and avoid costly mistakes.

New and Expanded Deductions for 2025

Several new deductions created by recent tax law changes kick in for the 2025 tax year (returns filed in 2026). These deductions are often above the line (reducing your Adjusted Gross Income), meaning they benefit even those who take the standard deduction:

No Tax on Tips: If you receive tip income, you may be able to deduct up to $25,000 of qualified tip income (and up to $12,500 for overtime income), with phase-outs at higher income levels.
Overtime Pay Deduction: Similar to tip income, qualifying overtime pay is now deductible up to $12,500 (or $25,000 for joint filers) within income limits.
Car Loan Interest Deduction: Certain interest paid on qualifying auto loans may now be deductible, up to $10,000 for eligible taxpayers.
Senior Bonus Deduction: Taxpayers age 65 or older can claim an additional deduction of up to $6,000 (or $12,000 for couples), on top of the standard deduction.

These new above-the-line deductions are reported on Schedule 1-A of Form 1040, which was specifically created to consolidate these new breaks.

Important Standard Deduction and SALT Updates

Even if you don’t itemize, changes to widely claimed deductions matter:

Standard Deduction Increases: For 2025, the standard deduction is approximately $15,750 for single filers and $31,500 for married couples filing jointly, helping reduce taxable income broadly.
SALT Deduction Expansion: The cap on State and Local Tax (SALT) deductions was significantly increased from $10,000 to $40,000* for 2025, though it phases out for higher-income taxpayers.

These changes mean that some taxpayers in high-tax states who previously defaulted to the standard deduction may now benefit from itemizing.

Commonly Overlooked Deductions (Even Before 2025 Changes)

Even without the tax law shifts, many eligible deductions are routinely missed due to lack of awareness or documentation:

Student Loan Interest Deduction – You can often deduct up to $2,500 of interest paid on qualified student loans, even if you don’t itemize.
Home Office Deductions – Self-employed taxpayers who use a dedicated space regularly for business can deduct related expenses.
Charitable Contributions – Cash donations, goods given to qualified charities, and mileage for volunteer work may all qualify.
Out-of-Pocket Educator Expenses – Teachers and education professionals may deduct classroom supplies they paid for personally.
Medical and Dental Costs – Deductible if unreimbursed expenses exceed a percentage of your AGI.
State Sales Taxes and Property Taxes – Even with limits, these can add up for itemizers.

How to Avoid Missing Deductions

Organize Records Throughout the Year – Keep receipts, statements, and documentation for all deductible expenses, not just large ones.
Review New IRS Schedules – Understand when new forms like Schedule 1-A apply and who qualifies.
Compare Itemizing vs. Standard Deduction – With the expanded SALT cap, it may make sense for more taxpayers to itemize.
Check Eligibility Carefully – Many new deductions have income phase-outs or limitations, so review rules carefully or consult a tax professional.

Bottom Line

The 2025 tax year introduces tangible opportunities for saving money through both new and established tax breaks. Staying informed about legislative changes, maximizing available deductions, and paying attention to often overlooked write-offs can significantly reduce your tax burden. With proactive planning, you can ensure you’re not leaving valuable money on the table.

Source : https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors

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