| The Senior & Standard Deductions Taxpayers over 65 will receive a deduction of $6,000 in addition to the standard deduction (and the additional standard deduction for those over 65). There is a phaseout for this deduction beginning at $75,000 ($150,000 MFJ). This is the only new deduction that married separate filers can still use. The standard deductions for 2025 are: Single/Married Separate: $15,750Head of Household: $23,265Married Joint: $31,500 Joint filers over 65 receive an additional $1,600; Single and Heads of House over 65 an additional $2,000 Deductions include out-of-pocket medical expenses (above 7.5% of income), State and Local Taxes, Mortgage Interest, and Charitable donations. If your amounts of these expenses do not exceed the standard deduction, then the standard deduction is the greater advantage. If your actual deductions are not close to the standard deduction, you can save yourself some time by not gathering and submitting the information. Note: There was no change in the law regarding taxable portions of social security. Social security can still be taxed depending on other income! |
| Car Loan Interest Deduction |
Beginning with 2025, there is a possible deduction for vehicle loan interest. Up to $10,000 of vehicle loan interest can be deductible, and you do not have to itemize to receive this benefit. There are a few important things to note:The vehicle must be brand new – not pre-owned, not certified, not a dealer demo – you must be the first titled owner.The vehicle must be built for road use, assembled in the US.Must be a Clean Air Act Title II vehicle.Lenders and servicers must send documentation to you if you are eligible for this benefit and the VIN must be included. A few things to note: this deduction is not a reason to go out and buy a new car, or to buy more car than you originally planned. Overall, it is not a very advantageous deduction. Since the car has to be brand new, you will lose far more than your tax deduction just by driving off the lot. Not to mention – if you write off $10,000 in car loan interest in a year, your car will have to cost more than most people’s homes… For example – let’s say you get a loan for an eligible new car for $30,000 and pay annual interest of $1,500 (roughly 5%). If you have a 12% effective tax rate, your tax savings is $180. Average annual depreciation of a car is 20%. You will have paid $1,500 in interest and lost $6,000 in value to save $300 in tax. Just food for thought! |
| Beware of Scams and Bad Information! |
| You may love doom scrolling on instagram, and you may see brilliant ‘tax strategies’ and seeing ‘what rich people do.’ Your coworkers may also be happy to give you some “tax advice”… be careful! So many things I have seen online or heard are either incorrect or blatant tax fraud. If you need to strategize or need advice, please reach out! The small fee you pay for a tax planning or strategy consultation may save you much more money and headache down the road! A tax planning and business consultation appointment is always a good idea before starting a business or forming an entity…because no, that S-Corp the influencer told you would save you thousands in tax isn’t the best idea for everyone! Keep in mind: the IRS will not call, text, or email you if there is an issue. You will receive a notice in the mail. If you have a question about any “IRS” communication you receive – reach out! |