10 Important Tax Benefits for 2025 & Beyond (OBBA)
With the One Big Beautiful Bill Act (OBBA) now fully in effect for 2025, several deductions and phase-outs have changed in ways that directly impact retirees, families, and high-income earners. Here are the 10 important tax benefits/tips to keep in mind.
1. Retirees: Protect the New $6,000 Senior Deduction
The new $6,000 deduction for those 65+ ($12,000 for couples) begins phasing out at $75,000 MAGI (single) and $150,000 (married) and declines at 6% of income above those thresholds, disappearing at $175,000 / $250,000.
Action: If you are near these limits, avoid extra taxable IRA withdrawals. Use QCDs to meet RMDs without raising your AGI.
2. Workers: Validate Your Overtime Coding
OBBA makes up to $12,500 of qualifying overtime ($25,000 for couples) deductible, but it phases out as income rises above $150k / $300k.
Action: Check your November–December pay stub. Ensure overtime is itemized separately. Request a correction before W-2s are issued.
3. Service Industry: Claim the New $25,000 Tip Deduction
Up to $25,000 of properly reported tips (2025–2028) are deductible and phase out above $150k / $300k in MAGI.
Action: Make sure tips are fully documented and reported. This deduction reduces tax while keeping income “on record” for lending purposes.
4. Buying a New Car? Confirm VIN Eligibility Before Year-End
Up to $10,000 of interest on auto loans (for purchases made in 2025) is deductible only if the vehicle’s final assembly is U.S.-based (VIN starting with 1, 4, or 5). The deduction starts phasing out at $100k / $200k MAGI and fully phases out near $150k / $250k.
Action: Double-check the VIN before you buy and close the loan before Dec 31.
5. Homeowners: Use the Expanded $40,000 SALT Deduction
The SALT (State and Local Tax) cap has risen to $40,000 for households with MAGI under $500,000, with a gradual phase-down above that.
Action: Prepay Spring 2026 property taxes before Dec 31 to maximize your 2025 itemized deductions.
6. Maximize Charitable Giving with Donor-Advised Funds (DAFs)
OBBBA expanded flexibility for charitable contributions, allowing you to front-load multiple years of giving into a DAF and take the deduction in 2025. This is especially useful for high-income earners or those near the senior deduction phase-out.
Action: Fund or “bunch” donations into a DAF before Dec 31 to maximize 2025 deductions.
7. Business Owners: Leverage Restored 100% Bonus Depreciation
OBBA restores 100% bonus depreciation for qualifying assets placed in service after January 19, 2025.
Action: Accelerate equipment, software, and vehicle purchases and place them in service before Dec 31 to fully deduct the cost on your 2025 return.
8. High-Net-Worth Families: Wait for the 2026 Estate Exemption Jump
The estate tax exemption rises to $15M per person ($30M per couple) on January 1, 2026.
Action: Delay large gifts until early January to take advantage of the higher exemption.
9. Investors: Watch MAGI When Realizing Gains
Realized capital gains increase your MAGI and can push you into phase-outs — especially the auto-loan interest and overtime/tip deductions.
Action: If you’re harvesting gains, stay under $100k MAGI (single) or $200k (married) to preserve the full auto-interest deduction.
10. Standard Deduction Math Still Matters
For 2025, the standard deduction is $31,500 for married couples and $15,750 for single filers, plus the separate senior bump and the new senior deduction (if eligible).
Action: If you’re close to itemizing, bunch charitable gifts and property tax payments into 2025 to beat the standard deduction.
Additional Resource/Links:
IRS – One, Big, Beautiful Bill Act: Tax Deductions for Working Americans and Seniors
Congress.gov – CRS Report: Tax Provisions in P.L. 119‑21 (OBBA)
JDSupra / Brownstein – One, Big, Beautiful Bill Act: Summary & Analysis
CBIZ – OBBA FAQs: What Business Owners & Individuals Should Know
Rödl & Partner – Key Tax Changes in the One Big Beautiful Bill Act