All information below was extracted from the IRS Website

Updated Tax Deductions

Effective 2025 - 2028

  • Mandatory tips that are included in the cost of meals or services are not excluded.

    • Deductible Tips must be reported on taxpayer’s form W2, 1099, or 4137 (IRS specified statement form completed by employer).

    • Deductions phase out if taxpayer’s adjusted gross income is over $150,000 ($300,000 for married filing joint taxpayers).

    • Completing the Itemized Deduction Form (Sch A) is not required.

    • Only the “half” portion of the “time-and-a-half” pay is deductible.

    • The overtime portion must be identified on the taxpayer’s W2, 1099, or other specified statement furnished to the individual by employer.

    • Employers must report the qualified overtime pay to the IRS for each employee.

    • Completing the Itemized Deduction Form (Sch A) is not required.

    • Qualified new vehicle must be used for personal purposes.

    • Vehicle weighs less than 14,000 pounds.

    • Vehicle’s final assembled in the USA as noted on the information label attached on the Vehicle upon purchase at dealership.

    • Must include new vehicle’s VIN # on the tax return

    • Lenders must provide taxpayers with the amount of interest paid.

    • Completing the Itemized Deduction Form (Sch A) is not required.

    • Must be age 65 on or before December 31 st of the filing tax year

    • Do not qualify if filing status is “Married Filing Separate”

    • Deduction phased-out for individuals if adjusted gross income for is over $75,000 and $150,000 for married joint filers.

Commonly Existing Tax Credits

  • The Child Tax Credit helps families with qualifying children get a tax break. You may be able to claim the credit even if you don’t normally file a tax return.  

    • The Child Tax Credit is worth up to $2,200 per qualifying child.

    • If you have little or no federal income tax liability, you may qualify for the Additional Child Tax Credit, up to $1,700 per qualifying child depending on your income. 

    • You must have earned income of at least $2,500 to be eligible for the ACTC.

    • Your annual income is not more than $200,000 ($400,000 if filing a joint return).

    To be a qualifying child for the 2025 tax year, your child generally must:

    • Be under 17 at the end of the tax year.

    • Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew).

    • Not provide more than half of his or her own support for the tax year.

    • Have lived with you for more than half the tax year.

    • Be claimed as a dependent on your return.

    • Be a U.S. citizen, U.S. National or a U.S. resident alien.

  • For individuals who are:

    • Over the age of 17

    • Be claimed as a dependent on your tax return.

    • Be a U.S. citizen, U.S. national, or U.S. resident alien.

    • Have a Social Security number, Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (ATIN).

    • Did not provide over 50% of his or her own support

    • Have lived with you for more than half the tax year.

    The maximum credit amount is $500 for each dependent and begins to decrease in value if your adjusted gross income exceeds $200,000 ($400,000 for married filing jointly).

  • The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.

    Taxpayers who qualify for the Earned Income Tax Credit (EITC) for 2025 may receive up to the maximum allowed amount that is based upon qualifying dependent children and the total income.

    For qualifying children, if you have:

    • No qualifying children: Maximum EITC is up to $649

    • 1 qualifying child: Maximum EITC is up to $4,328

    • 2 qualifying children: Maximum ETIC is up to $7,152

    • 3 or more qualifying children: Maximum EITC is up to $8,0463

    • Also, your total Income cannot exceed the amount below based upon # of children & Filing Status

    https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables#collapseCollapsible1769014284880

    Investment income limit: $11,950 or less

  • Education credits help with the cost of higher education. They can reduce the amount of tax owed on your tax return or they may increase your refund. There are two education credits available.

    • American Opportunity Tax Credit (AOTC) – partially refundable & allows a credit up to $2,500 per eligible student.

    • Lifetime Learning Credit (LLC) – non-refundable & allows a credit up to $2,000 per return.

    • The student can be you, your spouse (if filing jointly) or a dependent claimed on your tax return.

    • The eligible student must be enrolled at an eligible educational institution.

    • Tuition and enrollment fees that are paid out of pocket or from student loans are qualified educational expenses that are deductible for this credit.