Tax News

Recent Tax Legislation that Currently Affects Taxpayers

(Beginning with Most Recent Changes)

H.R.1-“One Big Beautiful Bill Act” (July 2025)

(The following 4 provisions apply to tax years 2025 through 2028)

  • No tax on certain tips-allows a deduction for up to $25,000 per year for qualified tips in certain occupations. The deduction begins to be reduced above incomes of $150K (300K for Married filing jointly).  Married filing separately status taxpayers are not eligible.  See here for the list of professions that this provision applies to:  https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf
  • No tax on certain overtime-allows a deduction of up to $12,500 per year ($25,000 for married joint filers) of qualified overtime compensation. The amount which is not taxable is not the entire amount of designated overtime pay, but rather the amount that exceeds the regular rate of pay.  This deduction starts to be reduced above incomes of $150K ($300K for Married filing jointly).  Married filing separately status taxpayers are not eligible.
  • Special Deduction for Senior Citizens-This new deduction allows taxpayers 65 and older to claim an additional deduction of $6000. If both spouses on a joint return are 65 or older, the maximum deduction is $12,000.  This deduction is in addition to the increased standard deduction that seniors receive when they are 65 or older.  The special deduction will begin to be reduced above incomes of $75K ($150K Married filing jointly).  Married filing separately status taxpayers are not eligible.
  • No tax on certain car loan interest-allows for a maximum annual deduction of $10,000 of interest on certain car loans (interest only—not the whole car payment). The deduction begins to be reduced over incomes of $100,000 ($200,000 for married filing jointly).  Married Filing Separate status taxpayers are eligible.   The loan must originate after Dec 31, 2024 and be used to purchase a personal use vehicle.  The vehicle must weigh under 14,000 pounds, and must have had final assembly in the United States.  The VIN must be reported on the tax return and car loan lenders will be required to provide a reporting document to show qualified interest.  See here for a link to the VIN decoder showing final assembly location:  https://www.nhtsa.gov/vin-decoder 

Additional Provisions:

  • The SALT (State and Local Tax) deduction is increased from a maximum of $10,000 up to $40,000 per return from tax years 2025 through 2029. (20K for married separate taxpayers).  You must itemize deductions to take advantage of this increased deduction and it may not apply to everyone, particularly married couples whose total itemized deductions are not greater than their standard deduction.  This benefit will be reduced (phased out) for incomes 500K-600K. (over 250K for MFS)
  • Starting in tax year 2026, there will be a limitation to itemized deductions for taxpayers in the 37% bracket.
  • The Child Tax credit maximum is increased from $2000 up to $2200 for children under 17.
  • Federal adoption credit is expanded.
  • For businesses (including self employed persons) 100% bonus depreciation is restored.
  • “Trump accounts” created-A pilot program for minors born between Dec 1, 2025 and Dec 21, 2028, where parents can contribute up to $5000 per year, and the government will contribute $1000 via federal grant. Details on these accounts and how they will be funded and implemented are expected to be forthcoming in the following months. 

The following benefits are/will expire:

  • Home energy credits (for expenditures made after December 31, 2025.
  • Clean energy credits for New or Used Vehicles purchased after September 30, 2025.

  For more information, see this article.

                                    

SECURE Act 2.0 (December 2022)

  •  Starting in 2023, the age for required minimum distributions from IRAs and retirement plans is 73. In 10 years it moves to 75.
  • “Emergency” Expense distribution from 401k up to $1000 could be taken that is not subject to 10% penalty.
  • Some businesses required to enroll employees in 401K plans.
  • There is now an option to rollover a 529 plan to a Roth IRA.

For more information, see this article.

 

Inflation Reduction Act (August 2022)

  •  Targets reducing America’s carbon emissions and greater use of clean energy  
  • Extends Premium subsidies in Affordable Care Act marketplaces, aims to lower some medical costs
  • Expands IRS enforcement funding by about $80 billion over 10 years.
For more information, see this article.
 

American Rescue Plan (March 2021)

  • Authorized (third round) $1400 per person stimulus payments for households under 80K (single), 120K (head household), and 160K (married joint)
  • Taxpayers with under 150K incomes can exempt $10200 of unemployment benefits received in 2020 from income taxes
  • Expands Child Tax credit to $3000 per child for 2021 ($3600 for children under 6) —Advanced payments began July 2021
For more information, see this article.

 

Consolidated Appropriations Act (December 2020)

  • Authorized additional stimulus payments of up to $600 per adult filer and $600 per qualifying child
  • Allows taxpayers to use 2019 income to calculate Earned Income Credit if desired.
  • Additional Unemployment benefits of $300 for 11 weeks.
  • Charitable Deduction amount increased to $600 for joint returns

For more information, see this article.

 

The CARES Act-2020

  • Authorized Economic Impact Payments of up to $1200 per adult filer and $500 for qualifying children. (most payments sent in April of 2020)
  • Additional Federal unemployment benefits of up to $600 for approx 4 months.
  • 401K loan amounts increased
  • Allows 401k distributions up to 100,000K without penalty for Coronavirus related reasons.  Taxes can be spread over 3 years.
  • Required minimum distributions from retirement accounts do not have to be taken in 2020
  • Charitable deduction of up to $300 allowed for taxpayers who do not itemize

For more detail, see this resource.

 

The SECURE Act-2019

  • Changed age for required minimum distributions from 70 1/2 to 72 for retirement plans such as IRAs and 401Ks
  • Eliminated “stretch” IRA for non-spouse beneficiaries.  Now funds must be disbursed within 10 years.

For more information, see this article.

 

Tax Cuts and Jobs Act-2017 (TCJA) Highlights

  • This legislation reduced tax rates thru 2025 to: 10%, 12%, 22%, 24%, 32%, 35%, 37%.
  • Increased Child Tax Credit from $1000 to $2000 and created a $500 credit for other dependents.
  • Capped itemized deduction for property tax and income tax paid to $10,000 per return, whether married or single.
  • Eliminated most miscellaneous deductions, such as job-related expenses.
  • Created a “pass through” deduction of 20% for small businesses (including sole-proprietors or 1099 contractors).

For more in depth discussion, see this article.