The state and local tax (SALT) deduction limitation has been temporarily increased from $10,000 to $40,000, effective for calendar years that begin in 2025 and end before January 1, 2030 .

The applicable limitation amount (half the applicable limitation amount in the case of a married individual filing a separate return) in any taxable year beginning in calendar year 2025 is $40,000.

The applicable limitation is adjusted for tax years beginning after 2025.

To claim this credit in 2025, the taxpayer’s modified adjusted gross income (MAGI) must not be more than $39,500 for Single, Married Filing Separately, or Qualifying Surviving Spouse (increase of $1,250).

MAGI must not be more than $59,250 (increase of $1,875) for Head of Household, and $79,000 (increase of $2,500) for Married Filing Jointly.

A deduction is allowed of up to $12,500 ($25,000 in the case of a joint return) of qualified overtime income received for the taxable year. The allowable deduction is reduced if the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return).

Qualified overtime compensation is defined as overtime paid to an individual whose occupation is covered by the Fair Labor Standards Act of 1938 (FLSA).

Only the overtime amount which exceeds the regular rate of pay is eligible for the deduction.

• No deduction allowed if taxpayer does not include a valid SSN on the return.
• If married, taxpayer must file a joint return to claim deduction.
• Deduction is allowed to non-itemizers.

A deduction is allowed for an amount equal to qualified tip income received during the taxable year that are included on statements furnished to the taxpayer.

• The allowed deduction for any taxable year cannot exceed $25,000.
• The allowable deduction is reduced if MAGI exceeds $150,000 ($300,000 if MFJ).
• No deduction is allowed if taxpayer does not include a valid SSN on the tax return.
• If married, taxpayers must file joint return to claim the deduction.
• Qualified tips means cash tips received by an individual in occupations where tips are customary.
• The deduction is allowed to non-itemizers.

Pub 4012 Excerpt, EITC Eligibility Requirements

The only changes to the EITC for 2025 are to the income limitations and credit amounts, as follows.

To be eligible for a full or partial credit, the taxpayer must have earned income and AGI of at least $1 but less than:

• $61,555 ($68,675 if Married Filing Jointly) with three or more qualifying children
• $57,310 ($64,430 if Married Filing Jointly) with two qualifying children
• $50,434 ($57,554 if Married Filing Jointly) with one qualifying child
• $19,104 ($26,214 if Married Filing Jointly) with no qualifying child

The maximum amount of credit for the 2025 Tax Year is:

• $649 with no qualifying children
• $4,328 with one qualifying child
• $7,152 with two qualifying children
• $8,046 with three or more qualifying children

Taxpayers whose investment income is more than $11,950 cannot claim the EIC.

EITC reminders:

• all TPs and qualifying children must have SSNs (not ITINs) to qualify. However, if the taxpayer’s Social Security card says “VALID FOR WORK ONLY WITH INS OR DHS AUTHORIZATION,” the taxpayer can use the Social Security number to claim EIC if they otherwise qualify. This may apply to our FSS clients!
• Earned income = wages in Line 1 plus self-employment income. It is not AGI and does not include unemployment, workman's comp, or social security, among others. See pub 4012 p. I-1 for a full list.

A deduction is allowed for up to $10,000 of interest on a qualified passenger vehicle loan used to purchase a passenger vehicle after 12-31-2024 (does not apply to used car purchases).

• A qualified passenger vehicle is a car, minivan, van, sport utility vehicle, pickup truck, or motorcycle with a gross vehicle weight of less than 14,000 pounds.
• Final assembly of the qualified vehicle must occur in the U.S.
• The Vehicle Identification Number (VIN) must be included on the return.
• The allowable deduction is reduced if the taxpayer’s MAGI exceeds $100,000 ($200,000 if MFJ).
• The deduction is allowed for non-itemizers.

For 2025, the annual contribution limits on deductions for HSAs for individuals with self-only coverage is $4,300 (increase of $150) and $8,550 for family coverage (increase of $250).

There is an additional contribution amount of $1,000 for taxpayers who are age 55 or older.