The new deductions at a glance
The first four are claimed on the new Schedule 1-A, so they lower your taxable income whether you take the standard deduction or itemize. The SALT cap only matters if you itemize.
| Deduction | Most you can deduct | Phase-out starts (single / joint) | Years |
|---|---|---|---|
| Qualified tips | $25,000 per return | $150,000 / $300,000 | 2025-2028 |
| Overtime premium pay | $12,500 ($25,000 joint) | $150,000 / $300,000 | 2025-2028 |
| New car loan interest | $10,000 | $100,000 / $200,000 | 2025-2028 |
| Age 65 or older | $6,000 per person | $75,000 / $150,000 | 2025-2028 |
| State and local taxes (SALT) | $40,000 cap in 2025, $40,400 in 2026 | $500,000 MAGI in 2025, $505,000 in 2026 | 2025-2029, then $10,000 |
How the phase-outs work
Each deduction shrinks once your modified adjusted gross income passes its threshold. The tips and overtime deductions lose $100 for every full $1,000 over the line. The car loan deduction loses $200 for every $1,000 or part of $1,000 over. The senior deduction loses 6% of the income over the line. The SALT cap drops by 30% of the income over its threshold, but never below $10,000.
For most people, modified adjusted gross income is simply the adjusted gross income on Form 1040, line 11b. Every calculator here shows the phase-out as its own line, so you can see exactly what it takes away.
Who gets the most from them
Servers, bartenders, stylists and other tipped workers benefit from the tips deduction. Hourly workers who get time-and-a-half can deduct the extra half with the overtime deduction. People who bought a new, US-assembled car with a loan after 2024 can deduct the interest with the car loan deduction. Anyone 65 or older can add the senior deduction on top of the regular extra standard deduction for age. Homeowners in high-tax states who itemize benefit most from the higher SALT cap.
None of these deductions lower Social Security or Medicare taxes. They reduce federal income tax only, so what you save depends on your tax bracket. Each calculator estimates that saving.
Questions
Can I claim these deductions if I take the standard deduction?
Yes for tips, overtime, car loan interest and the senior deduction: they are claimed on Schedule 1-A on top of the standard deduction. The SALT deduction only helps if you itemize.
Which tax years do the new deductions cover?
Tips, overtime, car loan interest and the senior deduction apply to tax years 2025 through 2028. The higher SALT cap runs through 2029 and returns to $10,000 in 2030.
Can married couples filing separately claim them?
Not the tips, overtime or senior deductions, which require a joint return if you are married. The car loan interest deduction and the SALT deduction are open to separate filers, with their own limits.
Do I need a Social Security number?
Yes. The tips, overtime and senior deductions require a valid Social Security number for the person claiming them, and for both spouses where the rule says so.
Are these calculators tax advice?
No. They follow the official IRS worksheets and give estimates to help you plan. Check your return or a tax professional before you file.
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