Every year since becoming a mom, I am amazed at how fast time seems to accelerate after Halloween. One minute you are carving pumpkins, and the next Thanksgiving is here, followed by school programs, dance recitals, and Christmas festivities. Before you know it, January rolls around and you are left catching your breath after the whirlwind of the holiday season.
Year-end tax planning often gets pushed aside, but with the One Big Beautiful Bill Act (OBBBA) introducing major tax changes in 2025, now is the time to act. Proactive planning can help you avoid surprises, maximize deductions, and position yourself for financial success under the new rules. Here are three key changes you should be aware of.
Enhanced Senior Deduction
The new enhanced senior deduction introduced under OBBBA is a game-changer for taxpayers aged 65 and older. Qualifying individuals can claim an additional $6,000 deduction—or $12,000 for married couples if both spouses qualify—on top of the standard deduction. This deduction significantly reduces taxable income and, for many retirees, eliminates federal tax on Social Security benefits altogether. However, it gradually phases out for incomes above $75,000 (single) or $150,000 (married filing jointly) and disappears completely at $175,000 and $250,000, respectively. To maximize the benefit, seniors may want to defer income, such as IRA withdrawals or accelerating deductible expenses, like charitable contributions. If you have investment income, consider reviewing your capital gains strategy and the timing of sales resulting in capital gain or loss. This could help lower your overall tax liability.
SALT Cap Increase
The state and local tax (SALT) deduction cap has jumped from $10,000 to $40,000 through 2028. This expanded deduction allows individuals to claim more of their property taxes, state income taxes, and local levies, creating new opportunities for year-end planning. To maximize this benefit, consider accelerating property tax or state income tax payments before year-end if you plan to itemize. Pair these payments with charitable contributions and mortgage interest to push your total deductions above the standard deduction threshold.
Auto Loan Interest
For the first time in years, eligible taxpayers can deduct up to $10,000 annually in interest paid on qualifying auto loans. Even better, this deduction is available whether you itemize or take the standard deduction. To qualify, the loan must be originated on or after January 1, 2025, and the vehicle must be brand new, used for personal purposes only, and have its final assembly in the United States. Be sure to obtain Form 1098 from your lender showing the interest paid and keep it with your tax records. This provision reduces taxable income and offers relief for those managing car payments but is temporary and set to expire after 2028. If you are planning on purchasing a new vehicle, consider timing it before year-end to take full advantage of this benefit.
To make the most out of these changes, staying informed and planning ahead is essential. With so many new provisions packed into this act, it is smart to check in with your CPA. They can help you understand how these updates—and others this article has not covered—might affect your unique financial situation. Schedule your year-end tax review today to make sure you are ready.
Amber Bittlebrun, CPA is a Senior Tax Accountant for Keller & Associates CPAs, PLLC.
Published in the Victoria Advocate.