State and Local Tax Deduction – Commonly Know as SALT
The deduction cap is temporarily increased to $40,000 for tax years 2025-2029 but gets phased out as your income exceeds $500,000 and is completely phased out when the income exceeds $600,000.
Enhanced Senior Deduction
Taxpayers aged 65 and older can claim an additional $6,000 deduction per person. It is based on age and income and phases out once your income exceeds $75,000 when filing single or $150,000 when filing Married Filing Jointly. This deduction is not available to Married Filing Separately. Contrary to the rhetoric, Social Security is still taxable as it was before up to 85% of benefits if your income exceeds $34,000 for filing Single and $44,000 if Married Filing Jointly.
Tips Deduction
A deduction of up to $25,000 for qualifying tip income is available for 70 occupations across 8 sectors where tips are customarily received. The deduction begins to phase out at a modified adjusted gross income of $150,000 for filing single and $300,000 for married filing jointly.
Overtime Pay Deduction
A deduction of up to $12,500 when filing single and $25,000 for married filing jointly is available for qualified overtime pay. It is income based and phases out once your income exceeds $75,000 when filing single or $150,000 when filing Married Filing Jointly. The deduction is only for overtime amount, in other words, the 1/2 extra pay and not the entire overtime amount that might show on your payroll summary.
Car Loan Interest Deduction
A deduction of up to $10,000 in interest paid is now available on a new US final-assembled new car, SUV, truck, or motorcycle purchased after December 31st, 2024. The deduction begins to phase out at a modified adjusted gross income of $100,000 for filing single and $200,000 for married filing jointly. The vehicle must be for personal use and weigh less than 14,000 pounds. You do not have to itemize to receive this deduction.
Charitable Deduction For Non-Itemizers
For 2026, taxpayers who do not itemize their deductions can take a $1,000 above the line deduction for single filers and $2,000 for Married Filing Jointly. Only cash, checks, or electronic contributions to qualified 501(c)(3) public charities will qualify. Donations of goods do not qualify for this deduction.