It’s tax-filing time — here’s what to know about deductions, 'no tax on tips,' and more
As for overtime, qualifying workers will be able to deduct up to $12,500 of overtime pay, or $25,000 for joint returns, with the perk similarly phasing out for those with incomes above $150,000 and only effective through 2028.
But, despite the provisions popularly being known as “no tax on tips” and “no tax on overtime,” “they are deductions, and it’s based on your tax rate,” Greene-Lewis said. Filers will still owe state and local taxes on that income, as well as Social Security and Medicare taxes.
Read more: Tax credits vs. deductions: What’s the difference?
Car loans
Taxpayers will be able to deduct interest paid on auto loans taken after Dec. 31, 2024, for new, made-in-America vehicles purchased for personal use, up to $10,000 annually through 2028, according to the IRS.
The deduction is available whether you’re itemizing or claiming the standard deduction.
Changes to the SALT cap
Trump’s new tax law hiked the cap on state and local tax (SALT) federal deductions from $10,000 to $40,000 for joint filers, especially benefiting big earners with expensive homes in high-tax states. By itemizing their deductions, these homeowners could see thousands of dollars in annual savings.
Child tax credit
The child tax credit received a tiny bump in the tax bill, rising from $2,000 to up to $2,200 per child for taxpayers who make under $200,000 annually as a single filer, or $400,000 if filing jointly. Moving forward, the maximum credit will be adjusted for inflation.
To qualify for the refundable portion of the child tax credit, which can be worth up to $1,700, taxpayers must earn at least $2,500 in annual income, locking out some extremely low-income families.
Green benefits
If you had renewable energy equipment installed in your home last year, you can still claim the tax perks that expired Dec. 31, 2025. Filers can receive a credit for up to 30% of a solar project’s qualifying costs, for example, as well as up to 30% of the total cost of certain energy efficiency home improvements installed through the end of last year, up to $3,200.
For the $7,500 electric vehicle tax credit, though, the car would’ve had to be purchased and acquired before Sept. 30.
>> Find more tax tips and information on our Personal Finance tax hub
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at
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