Year-End Tax Moves for Individuals in 2025

The One, Big, Beautiful Bill Act (OBBBA) introduced several new deductions and adjustments that apply beginning with the 2025 tax year. These updates play an important role in shaping your year-end tax moves 2025, especially as several new deductions begin this year.

Standard Deduction Increase

• For 2025, the standard deduction rises to $15,750 (Single/MFS), $31,500 (MFJ), and $23,625 (Head of Household).

• Many taxpayers will find the standard deduction more favorable than itemizing.

Additional Deduction for Seniors (65+)

• Individuals age 65+ may claim an additional $6,000 deduction for 2025–2028; $12,000 if both spouses qualify.

• Phases out when MAGI exceeds $75,000 (Single) or $150,000 (MFJ).

• Available whether you itemize or claim the standard deduction.

Deduction for Qualified Tips

• For 2025–2028, employees and self-employed individuals in “tip-customary” occupations may deduct up to $25,000 of qualified, reported tips.

• MAGI limits apply: under $150,000 (Single) or $300,000 (MFJ).

• Applies only to tips properly reported on Forms W-2, 1099, or 4137.

Deduction for Qualified Overtime

• Also for 2025–2028, individuals may deduct the overtime portion that exceeds their regular rate of pay—up to $12,500 (Single) or $25,000 (MFJ).

• Same MAGI limits as the tip deduction.

• Employers must report qualified overtime on required information statements.

Personal Vehicle Loan Interest Deduction

• For 2025–2028, individuals may deduct up to $10,000 of interest on a loan used to purchase a qualified personal-use vehicle bought after December 31, 2024.

• Vehicle must be originally placed in service by the taxpayer and secured by a lien.

• Phases out above $100,000 MAGI (Single) or $200,000 (MFJ).

Partially Refundable Adoption Credit

• Beginning in 2025, the adoption credit becomes partially refundable—up to $5,000 (indexed).

• Applies after accounting for qualified adoption expenses

What These Year-End Tax Moves Mean for 2025

The new year-end rules under the One, Big, Beautiful Bill Act make 2025 a unique planning year for individual taxpayers. These provisions create opportunities, but they also introduce new income thresholds, documentation requirements, and deduction limitations that can easily be missed without a clear plan.

If you’re unsure how these changes apply to your situation—or you want to make sure you’re not leaving deductions on the table—now is the time to get ahead of filing season. If you’d like help reviewing your 2025 income, deductions, or eligibility under the new law, I’m here to guide you. Schedule a year-end review or reach out with questions anytime.

The information provided in this blog is for general informational purposes only and is not intended to be comprehensive or serve as professional advice. Every business and financial situation is unique. I encourage you to consult with a qualified professional to address your specific needs and circumstances.