GBE Clients,
To keep you informed of the recent tax changes we will now focus federal income tax changes in place specifically for this current tax year.
No Tax on Overtime
New deduction:
Individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation.
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Maximum annual deduction is $12,500 ($25,000 for joint filers)
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Deduction phases out with modified adjusted gross income over $150,000 ($300,000 for joint filers)
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Eligibility: File jointly if married, to claim the deduction.
No Tax on Tips
New deduction:
Employees and self-employed individuals may deduct qualified tips received.
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Maximum annual deduction is $25,000 (may not exceed individual’s net income)
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Deduction phases out with modified adjusted gross income over $150,000 ($300,000 for joint filers)
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Eligibility: File jointly if married, to claim the deduction.
Deduction for Seniors
New deduction:
Individuals who are age 65 and older may claim an additional deduction of $6,000.
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The deduction is per eligible individual ($12,000 total for a married couple where both spouses qualify)
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Phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers)
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Qualified taxpayers: Must attain age 65 on or before the last day of the taxable year.
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Taxpayer eligibility: File jointly if married, to claim deduction.
No Tax on New Car Loan Interest (VERY SPECIFIC RULES)
New deduction:
Individuals may deduct interest paid on a loan used to purchase a qualified vehicle. (Lease payments do not qualify)
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Maximum annual deduction is $10,000
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Deduction phases out with modified adjusted gross income over $100,000 ($200,000 for joint filers)
Qualified Interest: The interest must be paid on a loan that is:
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Originated after December 31, 2024
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To purchase a new vehicle (used vehicles do not qualify)
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For a personal use vehicle (not for business, commercial, or farm use)
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Secured by a lien on the vehicle
Qualified Vehicle:
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Gross vehicle weight rating of less than 14,000 pounds
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Undergone final assembly in the United States
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The VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA) provides plant of manufacture information
Overtime and Tips will be listed on your W-2.
Deduction for Seniors we will calculate for you.
However, the deduction for New Car Loan Interest – CLIENT will need to provide GBE this information at tax time!
For more detailed questions please contact your GBE advisor.