If you read our original guide on OBBBA, this is the sequel nobody asked for but everyone needs. When the law passed, filing season was still a ways off. Now, that we’re officially in the “this actually matters” phase, we think it’s worth revisiting the key changes, along with the inflation-adjusted numbers that apply this year.

Standard Deduction – Before you even get into credits or special deductions, everyone starts with the standard deduction. For 2025, it’s a little bigger thanks to inflation adjustments.

• $ 15,750 | Single; Married Filing Separately
• $ 31,500 | Married Filing Jointly; Surviving Spouse
• $ 23,625 | Head of Households

Increased Child Tax Credit – For 2025 returns, the Child Tax Credit has been increased to up to $2,200 per qualifying child under age 17. The credit begins to phase out when MAGI exceeds $200,000 (or $400,000 for joint filers).

No Tax on Tips – Starting with 2025 returns, eligible tipped worked can deduct up to $25,000 of qualified tip income from taxable income. This deduction phases out when modified adjusted gross income (MAGI) exceeds $150,000 (or $300,000 for joint filers).

No Tax on Overtime – Working similarly to the tip deduction, the OBBBA created a temporary above-the-line deduction for qualified overtime pay: up to $12,500 for single filers, or $25,000 for joint filers.

The deductible portion is pay that exceed the regular rate of pay (think the “half” portion of “time-and-a-half). This deduction is available whether you itemize or not, but it phases out when MAGI exceeds $150,000 (or $300,000 for joint filers).

Additional Senior Deduction – Taxpayers age 65 and older receive a new $6,000 bonus deduction in addition to the regular standard deduction. If both spouses on a joint return are over age 65, this deduction doubles to $12,000. This deduction phases out as MAGI exceeds $75,000 for single filers (or $150,000 for joint filers).

Car Loan Interest Deduction – For the first time, interest paid on an auto loan may be deducted up to $10,000, with the deduction phasing out when MAGI exceeds $100,000 (or $200,000 for joint filers). To qualify:

• The loan must have originated after December 21, 2024
• The vehicle must be new and assembled in the U.S.

Pro Tip: If your VIN begins with a 1, 4 or 5, you likely qualify.

SALT Deduction Cap Rises…Temporarily – The state and local tax itemized deduction cap has increased to $40,000 for taxpayers with income under $500,000 who itemize (a significant jump from the prior $10,000 limit). This change may make itemizing more appealing to homeowners and high-tax state residents.

Renewable Energy Credits – Several renewable energy tax credits are being phased out, and 2025 is the cutoff for several of them. After the following dates, these credits are no longer available under current law.

• Solar Energy Credit | Solar panels must have been placed in service by December 31, 2025 to qualify
• Electric Vehicle Credit | Eligible electric vehicles must have been purchased by September 30, 2025.

Bonus Pro Tips for a More Informed Filing:

• IRA & Retirement Contributions | If you’re eligible, contributing to a Traditional IRA is still one of the simplest ways to lower taxable income and grow retirement savings. Here’s the part many people miss: you can make 2025 IRA contributions up until April 15, 2026.
  2025 contribution limits:
  • Up to $7,500 if you’re under age 50
  • Up to $8,500 if you’re 50 or older
• Business Owners & Pass-Throughs | If you’re self-employed or own a pass-through entity (LLC, S. Corp, etc.), talk to your preparer about how OBBBA business-related changes may affect your individual return.
• Consult with your CPA (Obvious but Important) | At Murtha & Flischel, we’re here for more than just filing your return. Many of these provisions include income thresholds and phase-outs; meaning what works for one taxpayer may not apply the same way for another. Professional guidance helps ensure you’re using every benefit correctly.