💸 3 Tax Breaks You Should Claim Before 2025 Ends — Major IRS Changes Explained
As 2025 comes to a close, many taxpayers are unaware that recent IRS guidance under the One Big Beautiful Bill (OBBB) has quietly expanded several powerful tax breaks.
These are not long-term planning ideas — they are year-end decisions that can
directly affect how much tax you owe for 2025.
From an Enrolled Agent’s practical perspective, here are three IRS-approved tax benefits you should review before December 31.
1️⃣ Tips & Overtime Income — Up to $25,000 Deduction
One of the most impactful updates under OBBB is the new deduction for tip income and overtime pay.
Eligible taxpayers may deduct up to $25,000 of qualifying income directly from taxable income.
A hospitality worker earns $17,500 in reported tips and $10,000 in overtime pay in 2025.
→ The deduction is capped at $25,000
→ Lower Adjusted Gross Income (AGI) may improve tax brackets and credit eligibility.
The IRS may deny this deduction if income is not properly documented.
Keep pay stubs, employer wage statements, and year-end income summaries to support the claim.
2️⃣ Auto Loan Interest Deduction — New for 2025
Starting in 2025, interest paid on a newly purchased vehicle may qualify for a federal tax deduction. This is a newly created benefit and did not exist under prior law.
- ✔ Applies to new vehicles only (used cars excluded)
- ✔ Personal-use vehicles are eligible
- ✔ Deduction capped at $10,000 per year
- ✔ Subject to income-based phase-out rules
To claim this deduction on your 2025 return, the vehicle purchase and loan must be completed before year-end.
Taxpayers with higher AGI may see the benefit reduced or eliminated. A year-end tax projection can help determine whether this deduction applies.
3️⃣ SALT Deduction Limit Raised to $40,000
The deduction cap for State and Local Taxes (SALT) has increased from $10,000 to $40,000 under OBBB. This change is especially meaningful for residents of high-tax states.
Property tax: $23,000
State income tax: $17,000
→ Total SALT paid: $40,000
→ Entire amount may now be deductible if itemizing.
Many taxpayers who previously relied on the standard deduction may benefit again from itemizing deductions in 2025. This shift alone can materially change a final tax bill.
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This article is based on U.S. federal tax law. Individual results vary depending on income level, state of residence, and personal circumstances. Consult a qualified tax professional before filing.