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New special US tax return income deductions starting in 2025
From Our Big Beautiful Bill (OB3) on July 4, 2025
Tips, Overtime, and New Car Loan Interest
This webpage was posted by the IRS on July 14, 2025. https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors It has basic information on each deduction. NC, at this point (Jan 2026), is not allowing these deductions.
If you want to claim one of these on your return, review that section for more details as well as what information will be will be needed to include it in your return.
Tips deduction – Max of $25,000 per return, must be voluntary tips from occupations traditionally receiving tips, SSN required, no MFS. Tips must be reported on a tax document, i.e. W2 or 1099.
Overtime premium deduction – Max of $12,500 per person, SSN required, no MFS. These should be reported on a document from the employer or, possibly, the last pay stub of 2025. Example of the deduction calculation: You make $10 per hour and get paid “time and a half” for overtime. You work one hour and get $15. Only $5 can be deducted.
Car loan interest deduction - Max of $10,000, vehicle must be a “personal use vehicle” purchased new in 2025, loan secured by a lien on the vehicle, assembled in the U.S. This vehicle cannot have been registered previously. If used for a business, at least 51% must be “personal use”.
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