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There’s one thing people often forget about a new tax law: the benefits do not apply on their own.
The One Big Beautiful Bill Act added a number of fresh deductions to the tax code, including breaks for workers, retirees and even people who recently purchased a car. They are real, but many taxpayers will pass them by without noticing.
I’ve been a CPA since 1981, and decades of seeing tax rules change have taught me this: the government will not remind you when you’re overpaying.
Before you file, here are seven new breaks worth a close look. Some may save you a few hundred dollars. Others could be worth much more.
1. An extra $6,000 deduction for people 65 and older: This is the biggest break for retirees. Starting with 2025 returns, anyone age 65 or older can claim an additional $6,000 deduction on top of the standard deduction and the existing senior add-on, according to the IRS.
If both spouses are 65 or older, that becomes $12,000 less taxable income.
You do not need to itemize. The catch is income: the deduction begins phasing out once modified adjusted gross income rises above $75,000 for single filers or $150,000 for married couples, and it disappears completely above $175,000 and $250,000.
Keeping income below those limits may take careful planning, such as timing retirement withdrawals or Roth conversions. If your situation is complicated, it may be worth getting a second set of eyes on it.
Potentially earn more from your money
Managing your finances with a professional can be worth it. If you are not doing that, you may be missing out on meaningful gains.
A Vanguard study found that, on average, a hypothetical $500,000 investment over 25 years would grow to $1.7 million if you managed it yourself, but more than $3.4 million with a financial adviser.
That is twice as much.
If you have at least $100,000 invested, consider a free service called Advisor Match. You answer a short questionnaire and get matched with up to three vetted financial advisers in your area, all legally required to act in your best interest.
Even if you do not need help choosing investments, an adviser can help reduce your tax bill, build a full financial plan, maximize Social Security and serve as a second set of eyes.
Using Advisor Match only takes a few minutes, and in many cases you can get 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 tax-free tips: If you work in a job where tipping is common — such as serving, bartending, hairstyling or driving — you can now deduct up to $25,000 in tips, the IRS says.
The deduction works whether you itemize or take the standard deduction.
There is also an income phase-out above $150,000 for single filers or $300,000 for married couples, and the tips must be reported. Even so, for many workers this is real money.
3. A tax break on overtime pay: If you put in a lot of overtime, the new law allows you to deduct the extra “half” in time-and-a-half pay — up to $12,500 for single filers and $25,000 for married couples filing jointly, according to the IRS.
That applies only to the premium portion, not your entire overtime check. The benefit also phases out at higher income levels.
Still, if you have been working extra hours, this can help make the effort pay off. Just remember that keeping more of your paycheck only matters if you put it to work wisely.
Earn a cash bonus from a high-yield bank account
If you are using a traditional brick-and-mortar bank, you may be paying too much and earning too little. A better option may be SoFi.
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Banking has changed, and your account may need to change with it.
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4. A deduction for car loan interest: This is one many people probably did not see coming. If you buy a new car for personal use, you may be able to deduct up to $10,000 a year in loan interest, according to the IRS.
There are a few conditions: the loan must be taken out after December 31, 2024, the vehicle must be assembled in the United States, and the purchase must be a purchase rather than a lease.
The deduction also phases out at incomes above $100,000 for single filers or $200,000 for married couples. But you can still claim it without itemizing.
If your money advice is coming from random online influencers, you are taking a risky path. 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 has stood the test of time.
5. A much larger state and local tax deduction: For years, the deduction for state and local taxes — including property taxes and state income taxes — was limited to just $10,000. The new law raises that cap to $40,000, according to Fidelity.
For homeowners in high-tax areas, that is a major change and could make itemizing worthwhile again.
The higher cap begins phasing down for very high earners, above $500,000 in income. For many homeowners, though, this is a welcome benefit.
6. A charitable deduction you can claim without itemizing: Most taxpayers now take the standard deduction, which has meant many people have not been able to deduct donations at all. That changes in 2026.
You will be able to deduct up to $1,000 in cash gifts, or $2,000 if married, without itemizing. Money Talks News previously explained how the revived charitable deduction works.
It may not be a huge amount, but if you give to a church or a favorite cause every year, you should be able to get some tax benefit for it.
7. A larger catch-up contribution for ages 60 through 63: This one is aimed at workers nearing retirement. Most workers age 50 and older can add an extra $8,000 to a 401(k), but people between ages 60 and 63 can contribute $11,250 instead, the IRS says.
That raises the total 401(k) contribution limit to $35,750 for the year, part of several retirement account increases for 2026.
Every dollar you put into a traditional 401(k) lowers your taxable income now. If you are in the final stretch before retirement, this can be one of the most effective moves available.
And while you are looking for ways to stretch your money before retirement, it is worth reviewing everyday expenses too. Many people in their 60s overlook one easy source of savings.
A discount source many people miss
If you are over 18, you may be able to save hundreds of dollars a year just by joining AARP.
“What?” you may ask. “I thought AARP was only for retired people.”
Actually, you do not need to be 50 or older to join AARP. Members can receive discounts on many items, including:
- Up to $200 per person off flights
- Up to 30% off rental cars
- Up to 15% off restaurants
- Up to 20% off hotels
You can also save on eyeglasses, prescriptions, meal delivery and more. AARP also offers a Fraud Watch Network, job listings, retirement planning tools, games and a wide range of information and resources.
Anyone trying to save money can benefit from joining, especially since membership can cost as little as $15 per year with auto-renewal. You may earn back that cost quickly.
One last thing before next year’s filing season
These deductions are real, but many of them are temporary. Several are scheduled to disappear after 2028, so they are use-it-or-lose-it benefits.
The new deductions for tips, overtime, car loan interest and seniors will be claimed on a new IRS form called Schedule 1-A. If you use tax software, it should guide you through the process. If you use a tax preparer, make sure to ask about it.
Also remember that the same law that created these breaks also eliminated several others permanently.
The point is simple: do not leave money unclaimed just because no one told you it was available.
Now you know. Go get it.
About the author
Sources: Internal Revenue Service (1); Fidelity (2).
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