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Here’s something nobody tells you about the new tax law: the breaks don’t claim themselves.
Congress passed the One Big Beautiful Bill Act back in July 2025, and it stuffed the tax code with new deductions — some for workers, some for retirees, some for folks who just bought a car. They’re real, they’re sitting there, and most people will walk right past them.
I’ve held a CPA license since 1981, and if there’s one thing four-plus decades of watching tax law mutate has taught me, it’s that the government will happily let you overpay. Nobody mails you a reminder.
So before you file, here are seven new breaks worth knowing about. Some could save you a few hundred bucks. A couple could save you thousands.
1. A $6,000 bonus deduction if you’re 65 or older: This is the big one for retirees. Starting with 2025 returns, anyone 65 or older can deduct an extra $6,000 — on top of the standard deduction and the existing senior add-on, according to the IRS.
Both spouses 65-plus? That’s $12,000 off your taxable income.
You don’t have to itemize to get it. The catch is income: it starts shrinking once your modified adjusted gross income tops $75,000 single or $150,000 married, and it vanishes entirely above $175,000 and $250,000.
Staying under those thresholds isn’t automatic. It can mean timing your retirement withdrawals or Roth conversions carefully — and if your situation is complicated enough that you’re not sure, here’s one way to get a second set of eyes on it.
Earn an extra million
To properly manage your money, work with a professional — it’s totally worth it. If you’re not doing this, you could be missing out on some serious financial gains.
A Vanguard study found that, on average, a hypothetical $500,000 investment over 25 years would grow to $1.7 million if you manage it yourself, but more than $3.4 million if you work with a financial adviser.
That’s twice as much!
If you’ve got at least $100,000 in investments, check out a free service called Advisor Match. You fill out a short questionnaire and instantly get matched with up to three vetted financial advisers in your area, all legally bound to work in your best interests.
Even if you don’t want help picking investments, an adviser can help lower your tax burden, create a comprehensive financial plan for you, maximize your Social Security, and serve as a second pair of eyes to make sure you’re on the right track.
Using Advisor Match only takes a few minutes, and in many cases you’ll be offered a free consultation.
Please carefully review the methodologies employed in the Vanguard white paper, “Putting a value on your value: Quantifying Vanguard Advisor’s Alpha.”
2. Up to $25,000 in tips, tax-free: If you work somewhere tipping is customary — serving, bartending, styling hair, driving — you can now deduct up to $25,000 in tips, the IRS says.
It works whether you itemize or take the standard deduction.
There’s an income phase-out here too, kicking in above $150,000 single or $300,000 married, and your tips have to be reported. But for a lot of working people, this is real money.
3. A break on your overtime pay: Pull a lot of overtime? The new law lets you deduct the extra “half” in your time-and-a-half — up to $12,500 if you’re single, $25,000 if you’re married filing jointly, per the IRS.
It’s only the premium portion, not your whole overtime check. And it fades out at higher incomes.
Still, if you’ve been grinding extra hours, this one finally pays you back for it. But here’s the thing — keeping more of your paycheck only matters if you do something smart with it. Don’t let it pile up in a checking account earning nothing.
Earn a cash bonus from this high-interest bank account
If you’re banking at a traditional brick-and-mortar bank, you’re getting ripped off. They’re charging you for a checking account and paying a pittance on your savings.
Better idea? SoFi.
They offer a combination checking-and-savings account, and if you set up direct deposit, you can earn a competitive APY on your savings. That’s several times the national average.
Better yet, they pay you a cash bonus just for signing up!
Direct-deposit $5,000 or more within the first 25 days, you'll get a cash bonus. Direct-deposit $1,000 to $5,000, you’ll get a $50 bonus.
Other cool features:
- Get paid up to two days early
- No overdraft fees or monthly fees
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Banking has changed. Time for you to change with it.
Check out SoFi right now.
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4. A write-off for car loan interest: Here’s one almost nobody saw coming. Buy a new car for personal use and you may be able to deduct up to $10,000 a year in loan interest, according to the IRS.
A few rules apply: the loan has to be from after December 31, 2024, the car has to be assembled in the United States, and it has to be a purchase, not a lease.
The break also fades above $100,000 in income single, $200,000 married. But you can claim it even if you don’t itemize.
Quick gut-check — if your money advice is coming from random online influencers, you’re playing a dangerous game. I’ve been a CPA since 1981 and writing about money since before the internet existed. Sign up for the free Money Talks Newsletter and get expert advice that’s been tested by time.
5. A much bigger deduction for state and local taxes: For years, the deduction for state and local taxes — property tax, state income tax — was capped at a measly $10,000. The new law lifts that cap all the way to $40,000, Fidelity reports.
If you live somewhere with steep property taxes, this is enormous. It can suddenly make itemizing worth your time again.
The bigger cap starts phasing down for very high earners, north of $500,000 in income. For most homeowners, though, it’s a gift.
6. A charity write-off you don’t have to itemize for: Most people take the standard deduction now, which means most people haven’t been able to write off their donations at all. That changes in 2026.
You’ll be able to deduct up to $1,000 in cash gifts, or $2,000 if you’re married, without itemizing a thing. Money Talks News broke down exactly how the resurrected charitable deduction works when it was announced.
It’s not a fortune. But if you give to your church or a cause every year, you might as well get credit for it.
7. A supersized catch-up if you’re 60 to 63: This one’s for people sprinting toward the retirement finish line. Most workers 50 and up can add an extra $8,000 to their 401(k) in 2026. But if you’re 60 to 63, you can add $11,250 instead, the IRS says.
That brings your total 401(k) limit to $35,750 for the year — one of several retirement account limits the IRS raised for 2026.
Every dollar you steer into a traditional 401(k) lowers your taxable income right now. If you’re in the home stretch and trying to catch up, this is one of the most powerful moves you’ve got.
And while you’re squeezing every dollar before retirement, it’s worth looking at your everyday costs too. Here’s one source of savings a lot of people in their 60s overlook.
Use this secret source for discounts
Are you over 18? Then you’re eligible to save hundreds of dollars every year simply by joining AARP.
“What?” You say, “I thought AARP was for retired people.”
As it turns out, you don’t have to be 50 or older to join AARP. And members get discounts on hundreds of things, like:
- Up to $200 per person off flights
- Up to 30% off rental cars
- Up to 15% off restaurants
- Up to 20% off hotels
You’ll also save on eyeglasses, prescriptions, meal deliveries and lots more. And that’s not all. AARP offers a Fraud Watch Network, job listings, retirement planning tools, games, and tons of information, programs and resources.
Anyone trying to save money can’t afford not to join AARP, especially since the cost is as low as $15 per year with auto-renewal. You’ll likely recoup the cost in the first week. Click here and check it out.
One last thing before you file next year
These breaks are real, but most of them come with an expiration date — several disappear after 2028. It’s a use-it-or-lose-it deal.
The new deductions for tips, overtime, car loan interest and seniors all get claimed on a new IRS form called Schedule 1-A. If you use tax software, it should walk you through them. If you use a preparer, ask.
And keep in mind that the code giveth and the code taketh away. The same law that handed out these breaks also erased a handful of others for good.
The bottom line? Don’t leave money on the table just because nobody told you it was there.
Now you know. Go get it.
About the author
Stacy Johnson founded Money Talks News in 1991 and has been writing about personal finance for more than 35 years. He earned his CPA in 1981 and spent the next decade as a Wall Street investment advisor before getting into TV journalism, where he was awarded two regional Emmys for personal finance reporting. He’s written thousands of TV and print stories on money and authored several books on personal finance.
Sources: Internal Revenue Service (1); Fidelity (2).
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