Other Requirements and Qualifications

No Tax on Tips:

Must be voluntary amounts (not service charges)
Must be reported on Form W2, Form 1099-NEC, Form 1099-K or directly by the individual Form 4137
Limited to occupations that the IRS identifies as customarily and regularly tipped: Link to List
Deduction is up to $25,000/year, available even if standard deduction.
Phases out once taxpayer MAGI exceeds $300K for MFJ, $150K for Single MFS, HOH

Overtime Relief:

Employers must separately report total qualified overtime on W2 (takes effect tax year 2026; tax year 2025, will need last paystub for 2025)
Taxpayer SSN must appear on the return
Deduction is up to $12,500 ($25,000 for MFJ) and is counting ONLY the “half” in “time and half” pay.
Available even if taking standard deduction
Phases out once taxpayer MAGI exceeds $300K for MFJ, $150K for Single MFS, HOH

Car Loan Interest Deduction:

Qualified interest is paid on debt incurred after 12/31/2024
VIN of vehicle must be reported on return
Applicable passenger vehicle must be:
- brand new, built for public roads and has at least 2 wheels
- Clean Air Act title II vehicle, with final assembly in the US
- Search for qualified vehicles: https://www.fueleconomy.gov/feg/tax2023.shtml
Deduction is up to $10,000
Available even if taking standard deduction
Phases out once taxpayer MAGI exceeds $200K for MFJ, $100K for Single MFS, HOH

Senior Deduction:

Additional $6,000 deduction per qualified taxpayer aged 65 and older before 12/31/2025 ($12,000 if MFJ and both 65)
Available even if taking standard deduction
Deduction is reduced by 6% of MAGI over $75,000 ($150,000 if MFJ)

SALT Cap Raised:

Deductions for State and Local Taxes portion of Itemizing was raised to $40,000 ($20,000 if MFS)
Phases out once taxpayer MAGI exceeds $500K for MFJ, $250K for Single MFS, HOH
Will not go below $10,000 for MFJ ($5000 for MFS)