Starting with the 2025 tax year (for returns you’ll submit in early 2026), there are a number of changes in federal law that could mean some extra savings for many consumers. Our financial education partner GreenPath reports that IRS guidance confirms there are changes; here are a few of the more significant items that could impact you and your tax return:
- Potential Deduction for Auto Loan Interest. This only applies for new autos purchased after December 31, 2024, for personal use. (There are a number of details and other requirements or restrictions.)
- Peer to Peer Payment App Tax Reporting. Platforms like PayPal, Venmo, and others will be required to send tax forms (1099-K) to all users who receive $2,500 or more in payments for goods and services. This is a new and lower threshold than the previous $5,000 amount in 2024, and is scheduled to go even lower for the 2026 tax year.
- “No Tax On Tips” and “No Tax on Overtime.” While not every job that occasionally receives tips will be eligible for this new tax break, it will impact a noticeable group of individuals, like those in the restaurant or hospitality services areas. The tax break on overtime is a bit broader. There are some requirements and caps for taxpayer eligibility on both of these new items, but the deductions will be available for both itemizing and non-itemizing taxpayers. Be sure to consult with a tax professional on details to see if you qualify.
- Tax Credits for Green Home Upgrades. Potential tax credits cover select energy-efficient home improvements, but those expire at the end of 2025.
- New Deduction for Seniors. Individuals who are 65 and older may be able to claim and additional $6,000 deduction. This is in addition to the current additional standard deduction for seniors under existing law. Plus, it is per eligible individual, so married couples would both qualify.
You can check out this article on the IRS site to learn more about these changes. And, of course, be sure to consult with a tax advisor regarding your specific situation. For tips on budgeting, improving your credit, and other tools to help improve your financial health, be sure to check out the numerous online resources available from our financial partner GreenPath.
