The 2025 tax landscape is evolving quickly, and I’m here to help you stay ahead of the curve. One of the biggest headlines is the dramatic increase in the state and local tax (SALT) deduction. After years of frustration over the $10,000 cap, itemizers in high-tax states like Connecticut, California, Massachusetts, Maryland, and New York can now deduct up to $40,000. This change could significantly impact households with high property taxes—but there’s a catch. The expanded deduction phases out between $500,000 and $600,000 of modified adjusted gross income (AGI), reverting back to the $10,000 cap at the top of that range.

If your AGI is under $500,000 and your itemized deductions exceed the standard deduction, I strongly recommend considering prepayment of 2026 state and property taxes in 2025. This strategy could help you take full advantage of the higher SALT cap while it’s still available.

Mortgage interest rules haven’t changed, but they’ve been clarified. You can still deduct interest on up to $750,000 of home acquisition debt across a primary and one secondary residence. However, interest on home equity loans used for anything other than buying or substantially improving your home remains nondeductible. This clarification makes documentation more important than ever—track how you use borrowed funds and keep records that tie spending to qualified improvements.

A new above-the-line deduction for auto loan interest is also worth noting. If you buy a qualifying new vehicle assembled in the U.S. and under 14,000 pounds, you can deduct up to $10,000 in interest—even if you don’t itemize. This deduction applies to purchases made between 2025 and 2028 and phases out for singles between $100,000 and $150,000 AGI, and for joint filers between $200,000 and $250,000. If you’re planning to buy a car, match your purchase year and expected AGI to the deduction window.

Let’s clear up a common misconception: Social Security benefits are still taxable—up to 85% depending on your income. What’s new is the senior bonus deduction, an above-the-line $6,000 for taxpayers age 65 and older. It begins to phase out at $75,000 AGI for singles and $150,000 for joint filers, disappearing entirely by $175,000 and $250,000 respectively. To optimize this benefit, pair it with charitable giving and medical deductions. If your income fluctuates, consider timing Roth conversions, required minimum distributions, and capital gains to avoid phasing out the senior bonus.

Two new labor-focused deductions reward service and extra effort. From 2025 to 2028, qualified tips can generate an above-the-line deduction of up to $25,000 per return, subject to income limits. Overtime follows a similar structure: singles can deduct up to $12,500, and joint filers up to $25,000. Phaseouts begin at $150,000 AGI for singles and $300,000 for joint filers, disappearing by $275,000 and $550,000. If your household relies on tips or extended shifts, these deductions can help offset inflation—just make sure your payroll and reported tips align with what you plan to claim.

Looking ahead, several energy incentives expire after 2025, including credits for residential clean energy, energy-efficient home improvements, and new and used electric vehicles. If you’re considering solar, geothermal, insulation, or EV purchases, 2025 is your deadline. In 2026, charitable giving rules shift: non-itemizers get a modest above-the-line deduction ($1,000 for individuals, $2,000 for joint filers), while itemizers face a new floor disallowing charitable amounts under 0.5% of AGI. High earners will also encounter a new cap on itemized deductions, reducing the value of every dollar given. Accelerate energy projects now and revisit your giving strategy for 2026—especially if you’re in the 37% bracket.

Finally, a new long-term custodial account—informally called “Trump accounts”—offers a savings vehicle for children. Individuals can contribute up to $5,000 annually, with employers adding $2,500. Children born between 2025 and 2028 receive a $1,000 seed, and minors under 18 are eligible to open accounts. Funds grow until age 18, with penalties for early withdrawals. Although funding begins in July 2026, families should start planning now.

With more above-the-line tools and more phaseouts, the winners will be those who plan early, manage AGI precisely, and document every qualifying expense. Let’s make sure you’re one of them.