• This will NOT be an addition to the standard deduction as previously thought.
• Instead, it will be an "above the line" deduction of $6,000 for each taxpayer over 65 who qualifies.
• Qualification is based upon MAGI and the deduction phases out for MAGI above $75K (single) and $150K (joint) and is totally phased out for MAGI above $175K (single) and $250K (joint)
• Qualifying taxpayers are entitled to this deduction even if they are not receiving SS benefits
• Temporary deduction for tax years 2025 - 2028

The exclusion of up to $25,000 of tip income (per return) is subject to the following limitations

• Tips must be seperately reported on W2 or 1099
• Taxpayer must work in industries where tips are customary (to be defined by Treasury Secretary but currently limited to food and beverage, beauty and hair care industries)
• Taxpayer must have a SS#
• Married taxpayers must file jointly to qualify
• Tips are still subject to FICA taxes
• Exclusion phases out when MAGI is > $150K (single) and $300K (joint)
• Temporary deduction for tax years 2025 - 2028

The exclusion of up to $12,500 of overtime premium income (per taxpayer) is subject to the following limitations

• Overtime must be separately reported on W2 or 1099
• Taxpayer must have a SS#
• Married taxpayers must file jointly to qualify
• Overtime is still subject to FICA taxes
• Exclusion phases out when MAGI is > $150K (single) and $300K (joint)
• Temporary deduction for tax years 2025 - 2028

A $10,000 deduction for auto loan interest subject to the following limitations

• Only applies to loans on NEW cars
• Only applies to vehicles bought in 2025 - 2028
• Only applies to vehicles assembled in the US
• Deduction phases out when MAGI is > $100K (single) and $200K (joint)
• Temporary deduction for tax years 2025 - 2028

For those interested in taking advantage of any of the "clean energy" credits, be aware of the following expiration dates

• $7.5K EV Credit - expires after 9/30/25
• $4.0K previously owned EV Credit - expires after 9/30/25
• Energy efficient credits (doors/windows) - expires after 12/31/25
• Solar energy credit - expires after 12/31/25
• EV Charging station credit - expires after 6/30/26

For those that DO NOT itemize

• Above the line deduction of up to $1,000 (single) or $2,000 (joint) for charitable contributions made
• Applies to cash contributions only

For those that DO itemize

• Establishes a floor of .5% AGI before any charitable deduction is allowed
• The floor applies to cash contributions only

Both of these changes do not take effect until the 2026 tax year

Child and Dependent Care Credit

• Increases the max credit from 35% to 50% of qualifying child/dependent care costs
• Phased down with AGI over $75K (single) and $150K (joint) but no phase down below 20%
• Increases the max amount deductible from income to $7,500 (from $5,000) for dependent care assistance programs from your employer

Child Tax Credit

• Child tax credit was made permanent
• Credit is increased to $2,200 per child in 2026 and inflation adjusted thereafter

• The provision to increase this to 23% was removed
• As a result, the QBI deduction remains at 20%

• Gambling losses were previously allowed up to the amount of your gambling winnings
• Under the new law, gambling losses are only allowed up to 90% of the gambling winnings

1099 NEC/MISC Reporting

• Currently required for independent contractors paid more than $600 in a calendar year for services provided
• Will now only be required if paid more than $2,000 in a calendar year

1099K Reporting

• Was set to be required for anyone receiving more than $2,500 in 2025 (down from $5,000 in 2024)
• This legislation reverts to prior law where a 1099K is only required if over $20,000 with more than 200 transactions in the tax year

Both of these changes do not take effect until the 2026 tax year

For those that get insurance on the exchange/marketplace

• Currently, if you received an insurance subsidy (referred to as Advance Premium Tax Credit or APTC), it was based upon an income projection at the time you enrolled on the marketplace.
• If the actual income reported on your tax return was higher than income projection, you had to pay back some of the excess APTC you received. However, there were limits on how much the IRS could take back.
• Under this new legislation, there is no limit on how much excess APTC the IRS can take back on the tax return.

• As noted above, many aspects of the tax reform legislation now require a SS # in order to be eligible for certain benefits or deductions
• Taxpayers that file with an ITIN will not be eligible for these items

There is still plenty of confusion regarding the announced "Trump accounts" but luckily these will have no impact until 2026 tax year so there is time to get more clarification. This is what we understand so far

• These are traditional IRA accounts for individuals under 18 years old
• An SS # is required to be eligible for a Trump account
• Up to $5K of after tax money can be contributed annually (by parents/relatives) to these accounts up until the child becomes 18
• The first contributions cannot be made until after July 4, 2026
• The money will grow tax deferred but more clarity is needed on how withdrawals will be treated
• For US citizens born between 1/1/25 and 12/31/28, the federal government will contribute a $1,000 initial credit per child to the Trump account