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Americans will soon see major tax changes — some starting in 2025 and others rolling out in 2026. These updates come from a sweeping tax law signed by President Donald Trump, which extends many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) while adding new benefits and phasing out certain credits.
Key Tax Provisions and Timeline
| Tax Provision | Effective Date | Temporary or Permanent |
|---|---|---|
| SALT deduction cap raised to $40,000 | 2025–2029 | Temporary (drops to $10,000 in 2030) |
| Auto loan interest deduction up to $10,000 | 2025–2028 | Temporary |
| $6,000 bonus deduction for seniors | 2025–2028 | Temporary |
| No tax on tips and overtime pay | 2025–2028 | Temporary |
| New charitable deduction for non-itemizers | 2026 | Permanent |
| EV tax credit ends | Sept. 30, 2025 | Permanent |
| Residential clean energy credits end | Dec. 31, 2025 | Permanent |
| Higher child tax credit ($2,200 + inflation) | 2025 | Permanent |
| Increased standard deduction | 2025 | Permanent |
| Reduced income tax rates | 2026 | Permanent |
| Qualified business income (20%) deduction | 2026 | Permanent |
2025: Immediate Tax Breaks
Starting in 2025, several changes could put more money in taxpayers’ pockets:
- SALT deduction cap rises to $40,000 through 2029.
- Auto loan interest deductible up to $10,000 for U.S.-assembled vehicles.
- Seniors get a $6,000 bonus deduction.
- Service workers won’t pay tax on up to $25,000 in tips, and overtime pay up to $12,500 ($25,000 for joint filers) is excluded.
2026: Permanent TCJA Extensions
In 2026, more provisions become permanent:
- Reduced tax rates under TCJA continue with inflation adjustments.
- Qualified business income deduction of up to 20% becomes permanent.
- Child tax credit increases to $2,200, indexed to inflation.
- Mortgage interest deduction and other TCJA rules remain in place.
Healthcare rules also shift: Affordable Care Act subsidies must be repaid in full if overpaid, and more health plans will qualify for Health Savings Accounts (HSAs).
Expiring Tax Credits
- Electric vehicle (EV) credits end Sept. 30, 2025.
- Residential clean energy credits (solar panels, geothermal, etc.) end Dec. 31, 2025.
Bottom Line
Taxpayers should prepare for both new savings opportunities and the loss of certain credits. Reviewing these changes now can help maximize benefits in the 2025 and 2026 tax seasons.
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