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Vehicle must weigh less than 14,000 pounds gross vehicle weight rating (meaning regular passenger / light vehicles: cars, motorcycles, vans, SUVs, pickups) and have at least two wheels.
The taxpayer’s modified adjusted gross income (MAGI) cannot exceed certain thresholds: for single filers ~$100,000; for married filing jointly ~$200,000. The deduction phases out for incomes above these thresholds and ends at ~$150,000 / ~$250,000 respectively.
The vehicle must be new, not used, and purchased for personal (not business) use.
Why it matters: Because the assembly must be in the U.S., even if the brand is “foreign,” the model qualifies if the final assembly is U.S.-based. This is intended to promote domestic manufacturing.
There is not yet a fully official IRS list publicly updated (or at least easily found) of every model that qualifies via final U.S. assembly. But multiple sources have compiled lists of vehicles whose final assembly occurs in the U.S., and so are likely eligible.
Here are examples of vehicles frequently cited as meeting the U.S. final-assembly requirement:
Honda Accord — assembled in Ohio.
Honda Civic Hatchback — assembled in Indiana.
Toyota Camry — assembled in Kentucky.
Toyota Corolla — assembled in Mississippi (for certain versions).
Chevrolet Bolt EV — assembled in Michigan.
New purchase only: Used vehicles don’t qualify.
Personal, not business use: The deduction is for vehicles purchased for personal use only (not commercial/fleet).
Income phase-out: If your MAGI is too high, the deduction phases out or is eliminated.
Verify final assembly & VIN: Because the rule depends on “final assembly in the U.S.” you may need to check the vehicle’s VIN or manufacturer/disclosure to confirm.
Weight limitation: Vehicles over 14,000 pounds gross weight do not qualify under the typical “light vehicle” threshold.
Timing: The deduction is effective starting tax year 2025 (for vehicles purchased in 2025) until 2028.
Starting tax year 2025 through 2028, individuals age 65 or older can claim an additional $6,000 deduction ($12,000 if married filing jointly) on their federal income tax.
This deduction is in addition to the standard deduction (or itemized deduction) for seniors.
It phases out for modified adjusted gross income (MAGI) above ~$75,000 for single filers and ~$150,000 for married joint filers.
Purpose: The administration says this will result in ~88% of Social Security beneficiaries paying no federal income tax on their Social Security benefits.
The law does not directly eliminate federal taxation of Social Security benefits or alter the base rules of benefit eligibility.
In other words: Social Security benefit taxation rules remain in place; however, the additional deduction in many cases offsets the tax liability.
Because taxes on Social Security benefits go into the Social Security trust funds, eliminating them outright would have budget/trust-fund implications.
If you are 65+, this law could reduce or eliminate federal income tax owed on Social Security benefits particularly if you have moderate income and qualify for the deduction.
It’s still important to assess total income (pensions, part time work, investment income, etc.) since the deduction phases out above certain income thresholds.
While it’s good news for many seniors, it doesn’t change eligibility age, benefit formula, or underlying Social Security benefits, so retirement planning should still take those into account.
When employees report their tips, those tips are considered taxable income — they increase:
Federal income tax
Social Security & Medicare (FICA) tax
State income tax (in most states)
Now, workers can deduct 50% of their reported tips from their taxable income on their federal tax return.
Let’s say an employee earns:
$18,000 in hourly wages
$12,000 in tips (all reported correctly)
Previously, all $30,000 was taxed.
Now:
The employee gets a deduction for 50% of the $12,000 tips → $6,000 deduction
So, they are only taxed on $24,000 instead of $30,000
This lowers their federal income tax amount and can lower their bracket.
Applies to:
Employees who report tips (W-2 workers)
Does Not Apply To:
Owners, self-employed, or unreported (cash-in-pocket) tips.
Purpose:
Encourages legal reporting of tips, reduces tax burden on service workers.
Limitations:
150k Single
300K MFJ
Overtime pay you earn can be excluded from federal income tax:
Filing Single:
Up to $12,500 of overtime is not taxed
Married Filing Jointly
Up to $25,000 of overtime is not taxed
This means the overtime portion of your paycheck does not count toward your taxable income — up to the allowed limit.
Overtime pay you earn can be excluded from federal income tax:
Filing Single:
$150,000 Modified Adjusted Gross Income (MAGI)**
Married Filing Jointly
$300,000 MAGI
If you are 65+, this law could reduce or eliminate federal income tax owed on Social Security benefits particularly if you have moderate income and qualify for the deduction.
It’s still important to assess total income (pensions, part time work, investment income, etc.) since the deduction phases out above certain income thresholds.
While it’s good news for many seniors, it doesn’t change eligibility age, benefit formula, or underlying Social Security benefits, so retirement planning should still take those into account.
Save your last paycheck stub of the year and bring it to your tax appointment.
Put it in your wallet. Take a picture of it. Email it to yourself — just don’t lose it or throw it away.
Before:
Taxpayers could claim the Child Tax Credit for dependents with an ITIN.
Now:
To qualify for the Child Tax Credit, the child must have:
A valid SSN
Issued before the tax return’s due date
If either the taxpayer or the spouse, if there is a spouse have an itin number none of the children listed on the return will be eligible for child tax credit.
This primarily affects:
Immigrant families
Households where the child is still waiting for SSN authorization
Families who previously claimed the credit using ITIN dependents
A family has:
2 children
One has an SSN → Eligible for $2,000 Child Tax Credit
One has an ITIN → Eligible only for the $500 Other Dependent Credit
The government’s stated reasons:
To align tax credits with work authorization status
To prevent fraud and ineligible claims
To confirm U.S. identity documentation
Impact:
Households with ITIN dependents may see a significant reduction in their refund.
One, Big, Beautiful Bill Act, signed into law on July 4, 2025, as Public Law 119-21, that go into effect for 2025.
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