New Tax Bill Signed Into Law: What It Means For You

Key Tax Changes

  • Tax rates stay the same. The current brackets (10% to 37%) from the 2017 tax law are now permanent.

  • Standard deduction goes up.

    • Married couples: +$1,500

    • Heads of household: +$1,125

    • Single filers: +$750

  • New senior deduction (2025–2028).Seniors can deduct an extra $6,000. The benefit phases out:

    • Single: $75,000–$175,000

    • Married: $150,000–$250,000

  • Child tax credit increases to $2,200, up from $2,000.

Work & Wage Benefits

  • Tips deduction (2025–2028). Up to $25,000 in qualified tips is tax-deductible for both employees (W-2) and contractors (1099-K). Phases out above $150,000 ($300,000 joint).

  • Overtime deduction (2025–2028). Deduct up to $12,500 ($25,000 joint) for qualified overtime pay.

Other Provisions

  • Vehicle loan interest deduction (2025–2028). Deduct up to $10,000 in interest on loans for new U.S.-assembled vehicles.

  • Student loan forgiveness due to death or disability is now permanently non-taxable.

  • State and local tax (SALT) deduction cap rises to $40,000 (from $10,000) through 2029. It drops back to $10,000 in 2030.

  • Electric vehicle tax creditsend Sept. 30, 2025.

    • New EVs: Up to $7,500

    • Used EVs: Up to $4,000

  • Adoption tax credit expanded. Up to $5,000 of the credit is refundable for low-income families.

  • New Trump Accounts for kids.

    • $1,000 gifted at birth (2025–2028 births only)

    • Up to $5,000 per year in contributions allowed

    • Withdrawals allowed starting at age 18

  • Expanded 529 plan use.

    • New $20,000 annual withdrawal cap for K-12 tuition

    • Can now be used for books, tutoring, homeschool, therapies, and certificate/trade programs

Tax Law Changes Starting in 2026

  • Everyone can now deduct donations– even without itemizing.

    • Up to $1,000 for individuals

    • Up to $2,000 for married couples

  • But itemizing donations gets tougher.

    • You can only deduct the part of your donations that exceed 0.5% of your income.

    • Example: Make $200,000, donate $20,000 → only $19,000 counts.

  • Mortgage insurance premiums are now deductible if you itemize.

  • Top earners see an itemized deduction cap.

    • If you're in the 37% bracket, your itemized deductions can only reduce tax up to a 35% rate.

  • Gambling Losses

    • New limit: You can now only deduct 90% of your gambling losses.

    • Old rule: Deduct up to the amount of your winnings

    • New rule example: Win $10,000, lose $15,000 → you can only deduct $9,000 (not $10,000)

  • New Remittance Excise Tax

    • Sending money abroad? A new 3.5% excise tax applies to personal remittance transfers to foreign recipients.

Rob Ostrower