2025 Tax Law Changes
Businesses
100% Bonus Depreciation: Businesses may immediately and fully depreciate the cost of certain qualified assets, such as equipment and vehicles, in the year they are placed in service.
Individuals
Increased State and Local Tax (SALT) Deduction: The SALT deduction limit increases from $10,000 to $40,000. This change benefits taxpayers who itemize deductions rather than use the standard deduction ($15,750 for single filers, $31,500 for joint filers, and $23,635 for heads of household). Taxpayers with substantial mortgage interest or higher income from wages or business are more likely to benefit.
Additional Deduction for Seniors: Individuals over age 65 may claim an additional $6,000 deduction. This is a new deduction separate from the existing senior standard deduction. It begins to phase out at $75,000 in gross income ($150,000 for joint filers).
Above-the-Line Charitable Deduction: Taxpayers can deduct up to $1,000 in charitable contributions ($2,000 for joint filers), regardless of whether they itemize or take the standard deduction.
Tax-Free Tip Income: Up to $25,000 in tip income is exempt from federal taxation. This benefit phases out at $150,000 of gross income ($300,000 for joint filers).
Tax-Free Overtime Income: Up to $12,500 in overtime income is federally tax-exempt. The benefit also phases out at $150,000 of gross income ($300,000 for joint filers).
New Vehicle Interest Deduction: Interest on new vehicles with final assembly in the United States is deductible up to $10,000. This deduction is available even when claiming the standard deduction. It phases out at $100,000 in gross income ($200,000 for joint filers).
Elimination of EV and Solar Credits: Federal tax credits for electric vehicles (EVs) and solar energy installations have been eliminated.