A new federal tax bill brings valuable opportunities for both individuals and businesses in 2025. Here’s a breakdown of the top provisions and how you can take advantage of them.
1. Deduct Your Tips — Up to $50,000
If you report tips on your taxes, you may now deduct them — up to $25,000 (single) or $50,000 (married).
Who qualifies?
- Workers in restaurants, salons, spas, delivery, hospitality
- W-2 or 1099 income, as long as tips are reported
Limitations: MAGI under $150,000 (single) / $300,000 (married)
What to do:
- Keep accurate tip logs or POS records
- Save paystubs or tip allocation statements
We’ll help you claim the new deduction at tax time!
2. Deduct Your Overtime — A First-Time Tax Break
The new law allows you to deduct a portion of your overtime pay.
You may qualify if:
- You work more than 40 hours/week and earn overtime
Limitations: MAGI under $150,000 (single) / $300,000 (married)
You are paid hourly or by contract
What to do:
- Bring year-end paystubs showing OT separately
- Ask your employer for a wage summary if needed
Your team at Accavallo & Company will handle the deduction on your return.
3. Car Loan Interest? Now Deductible
For the first time in years, the IRS will allow deductions on personal-use car loan interest — for 2025–2028.
Eligibility checklist:
- Vehicle is under 14,000 lbs and not used for business
- You have a traditional auto loan in your name
- VIN must be entered on your tax return
- Vehicle final assembly completed in the United States
Limitations: Phase out begins on MAGI over $100,000 (single) / $200,000 (married)
What to do:
- Keep loan statements and a copy of the agreement
- Provide us your VIN and payment history
We’ll determine your eligibility and file accordingly
4. Trump Accounts — New Tax-Free Savings for Kids
A new account for children under 18 allows tax-free savings with a special newborn bonus.
Features:
- Contribute up to $5,000/year per child
- One-time $1,000 bonus for children born 2025–2028
- Can be used for future education, housing, or healthcare
Note: We can help you evaluate how this strategy fits your overall plan.
5. Bonus Depreciation is Back – 100% Write-Off for New Equipment
Businesses can now deduct 100% of the cost of qualified property placed in service from now through 2027 — no need to depreciate over years.
What qualifies?
- Equipment, computers, machinery, furniture, software
- New or used (as long as it’s new to you)
- Placed in service before 12/31/2027
What to do:
- Time large purchases strategically
- Bring a list of recent or upcoming equipment buys to your planning meeting
6. R&D (Section 174) Deductions Restored
Businesses can again fully deduct domestic research and development expenses — retroactive to 2023.
What this means:
- Covers software, product development, engineering, process testing
- Missed 2023 or 2024 deductions may be taken via amendment or 2025 catch-up
- Foreign research must still be amortized
What to do:
- Bring records of 2023–24 research or innovation costs
We’ll guide you through deduction options or a Form 3115 catch-up in 2025
7. Section 179 Expensing Limit Raised
Small businesses can now deduct up to $1.4 million in qualifying property — instantly.
Who benefits?
- Businesses purchasing equipment, furniture, vehicles, or office upgrades
- Deduction phases out after $3.5 million in total purchases
- Must have sufficient income to use the deduction
What to do:
- Let us know if you’re planning a capital investment
- We’ll compare Section 179 vs. bonus depreciation to maximize your tax outcome
8. Opportunity Zones & EV Credits Continue
Opportunity Zones and clean vehicle credits remain excellent incentives for investors and business owners.
Details:
- OZ benefits extended through 2030 — tax deferral & long-term capital gain exclusions
- Up to $40,000 per vehicle in EV credits for clean fleet purchases
- 30% tax credit for installing commercial EV charging stations
What to do:
Let us know if you’re planning a property or fleet investment. We’ll verify if the asset qualifies and ensure proper IRS documentation.
Want to review these options together before year-end?
Call us at (203) 925-9600 to speak with a team member or visit www.aco.cpa for more information on our services.
