The bill passed on July 3rd, 2025, includes many changes to tax law. As an individual it can be difficult to know what new deductions you may be able to take advantage of, and what credits have been discontinued.
Enhanced Deduction For Seniors
Taxpayers above the age of 65 and an AGI of less than $75,000 ($150,000 if Married Filing Joint) will have an extra $6,000 deduction for each taxpayer over 65. This deduction has a 6% AGI phaseout, meaning senior taxpayers making between $75,000-$175,000 ($150,000-$250,000 if Married Filing Joint) will be able to take a partial deduction.
No additional forms are required to claim this deduction, and it can be claimed whether you are Itemizing or taking the Standard Deduction.
New Deduction for Tip Income
Tip income is one of the IRS’s most heavily scrutinized areas. Accurate reporting protects you from mismatch notices and ensures you receive the full deduction available under the new law. This can be claimed whether you are Itemizing or taking the Standard Deduction.
What we do with this: We reconcile your W‑2, tip logs, and 1099 forms to ensure your income is correctly reported and that you receive every deduction you qualify for.
Common issues we see:
- Employers forget to include allocated tips on the W‑2.
- Tips paid through apps (DoorDash, Uber, Square, etc.) appear only on 1099‑Ks.
- IRS mismatch letters are triggered when reported tips don’t match employer filings.
Documents to provide:
- W‑2 showing tip income
- Tip logs if tips aren’t included on your W‑2
- 1099‑NECs and 1099‑Ks for business owners receiving tips
How to find this document:
- Your W‑2 is in your employer’s payroll portal.
- Tip logs can be digital or handwritten — as long as they’re contemporaneous.
- 1099‑NECs and 1099‑Ks are issued by payment processors or platforms.
New Deduction for Overtime Pay
Overtime can increase your refund or reduce your taxable income, but only if your hours and pay are documented accurately. Unfortunately, the W2s being sent out for the 2025 tax season do not have a dedicated box on the form for Overtime Pay. Next year's W2 form will be updated. This deduction can be claimed whether you are Itemizing or taking the Standard Deduction.
What we do with this: We verify your total hours, overtime hours, and employer adjustments to ensure your W‑2 is accurate and that you receive the full deduction.
Common issues we see:
- Payroll systems misreport overtime hours.
- W‑2s sometimes omit year‑end adjustments.
- Clients lose deductions because overtime wasn’t properly documented.
Documents to provide:
- Year‑end paystub showing total hours and overtime hours
How to find this document:
- Your year‑end paystub is usually in your payroll portal under “2025 Pay History.”
Automobile Interest Deduction for New Vehicles
Automobile Purchased in 2025
Certain vehicles qualify for federal deductions or credits based on where they were assembled. The VIN is the only way to confirm eligibility. Loan interest may also be deductible in business or itemized situations. This particular deduction can be claimed whether you are Itemizing or taking the Standard Deduction.
What we do with this: We use your VIN to verify whether your vehicle qualifies for the deduction and your interest statement to calculate the allowable deduction.
Common issues we see:
- Dealerships don’t always provide the correct interest statement.
- Clients often don’t know their vehicle qualifies because they never check the VIN.
- Missing documentation causes clients to lose out on deductions worth hundreds of dollars.
Documents to provide:
- VIN number (vehicles starting with 1, 4, or 5 are U.S.‑assembled and may qualify)
- Annual car loan interest statement dated 12/31/2025
How to find this document:
- Your VIN is on your registration, insurance card, or the driver‑side door frame.
- Your 12/31/2025 interest statement is mailed or emailed by your lender in January.
Enhanced Federal Itemized Deduction for State & Local Taxes (Up to $40,000)
The cap for the State and Local Tax (SALT) deduction has been increased from $10,000 to $40,000 under the One Big Beautiful Bill. This expanded limit can dramatically reduce your federal tax liability, but only if every eligible state and local tax is properly documented.
What we do with this: We total all state and local taxes you paid in 2025 and apply the enhanced SALT deduction to maximize your itemized benefits.
Common issues we see:
- Property tax bills are missing or incomplete
- Local Oregon taxes are overlooked because they appear only on paystubs
- W‑2 Box 14 codes are misread or not provided
- Clients assume only property taxes count (all four Oregon local taxes count too)
Documents to provide:
- State and local income tax bills
- Property tax bills
- Preschool for All Tax
- Supportive Housing Services Tax
- Paid Family Leave Oregon withholding
- Statewide Transit Tax withholding
How to find this:
- Property tax bills: county website or mailed statements
- Local taxes: W‑2 Box 14 or paystubs
- State income tax payments: Oregon Revenue Online
Termination of the Clean Vehicle Credit and the Previously Owned Clean Vehicle Credit
Multiple credits have been set to expire on December 31st, 2025 and won't be seen on your 2026 tax return. The New and Previously Owned Clean Vehicle Credits are exceptions and were set to expire partway through 2025.
Only qualifying vehicles purchased before September 30th, 2025 will be eligible for these credits.
For more information, visit the IRS Newsroom