The Tax Cut and Jobs Act (TCJA) was in effect 2018 through 2025, which eliminated personal exemptions, doubled the standard deduction, eliminated employee business expenses, capped the state/real estate tax deductions, lowered tax rates, etc. The 2025 tax bill legally named "Public Law 119-21" made further changes, some retroactively for 2025 and others for future years.

A few of the noteworthy new laws are 'no tax on tips', 'no tax on overtime', and new car loan interest deduction.
Some additional changes for 2026 are noted in that reference.

No Tax on Tips

Tip income is still subject to Federal and state withholding as well as social security/medicare tax, as this is a deduction after the fact, not an initial exclusion of income, and in an industry where tips are normally given, such as the restaurant, food delivery and hair/nail care industries. Statements (such as the W2) are to be furnished from employers to employees to provide documentation, or other record-keeping for self-employed. For tax year 2025 an alternate record-keeping is acceptable to give employers time to follow new regulations.

Maximum deduction is $25K per person and reduced by 10% of modified adjusted gross income in excess of $150K (or $300K MFJ). Ineligible if filing MFS or not having a social security number. Deduction in effect through 2028 tax year. (This will not be a MA state deduction.)

Observation: This deduction may be of limited benefit to some taxpayers having a low tax liability due to other credits such as education, e.g. taxpayers working in a restaurant while attending college.

No Tax on Overtime

Another similar deduction, income from the 1/2 portion of wage earnings will be allowed as a deduction. Maximum deduction will be $12,500 per person and reduced by 1% of modified adjusted gross income ($100 for every 1K) in excess of $150K (or $300K MFJ). Fully phased-out at $275K ($550K MFJ). Even if an employer pays a higher rate for overtime (ie, double-time), calculation is based on a maximum 1/2 rate of regular earnings. Ineligible if filing MFS or not having a social security number. Deduction in effect through 2028 tax year. (This will not be a MA state deduction.)

New car loan interest deduction

Deduction up to 10K interest on a new personal-use passenger vehicle (car, van, truck, motorcycle, etc.) under 14,000 lbs purchased after 2024 with final assembly in US. Refinancing the original loan interest will not void the deduction, good for tax years 2025-2028 regardless whether or not itemizing, and phaseout starts when modified adjusted gross income exceeds $100K ($200K MFJ). Car dealer provides necessary reporting info to the taxpayer to claim on the tax return

Notable changes to 2025 and 2026 listed in the standard deductions and tax numbers sections

• An additional increase in the annually-adjusted standard deductions for 2025.

• Child tax credit increased by $200 to 2.2K and dependent care flex spending accounts allowed up to 7.5K from 5K.

• Senior deduction: an extra 6K deduction for ages 65+ through 2028 .

Starting in 2026:

• those taking the standard deduction allowed up to 1K (2K joint) for charitable deductions

• Schedule A itemizers must reduce charitable deductions by 1/2 % AGI (similar to how the itemized medical deduction works.)

• An itemized deduction, gambling losses limited to 90% of gambling winnings

As I alerted clients in July, the energy credits were being eliminated:

• end of 2025, elimination of credits for qualified energy improvements to your home.

• end of Sept 2025, elimination of credit for purchase of electric vehicle.

An additional increase in the annually-adjusted standard deductions that were scheduled for 2025.

Starting in 2026, those taking the standard deduction allowed up to 1K (2K joint) for charitable deductions, though itemizers must reduce charitable deductions by 1/2 % AGI (similar to how the itemized medical deduction works.)

One change, the 'SALT' limitation (itemizing state/local/property tax) has been increased from a maximum 10K to 40K, adjusted +1% through 2029; phaseout at higher income over 500K.

Time running out:

Eliminated at end of 2025 are credits for qualified energy improvements to your home, part of policies to help improve environmental conditions. Advice: If you were planning to install energy-efficient [doors/windows/HVAC/heat pumps/solar panels], do so now. Buying an electric car, very little time as this credit is being eliminated end of this September 2025.New deductions: in addition to your standard or itemized deductions.

Senior deduction: an extra 6K deduction for ages 65+ through 2028 (with the additional age 65+ amount as adjusted). This deduction starts to phase out at income over 75K / 150K joint. [Observation: there is no change in the rules of social security being taxed, but this deduction may also have an effect on the taxable calculation on those benefits for some, but not most.]