The “One Big Beautiful Bill” has introduced new federal tax credits designed to assist service industry workers, seniors, and those purchasing American-made vehicles. Dr. Kelly Tassin, an accounting professor at Missouri State University, noted, “A lot of taxpayers, especially those in the service sector, will qualify for this deduction. It starts to decrease as you earn more, eventually phasing out completely.”
The legislation also features a “tax-free overtime” deduction, which enables taxpayers to deduct up to $12,500. Additionally, seniors aged 65 and older who file a tax return may qualify for an extra deduction of $6,000, though this will be phased out for incomes over $75,000. In light of inflation, the child tax credit has been increased to $2,200 per child.
People who financed a new personal vehicle last year could potentially deduct up to $10,000 in interest, as long as the final assembly of the car occurred in the U.S. Dr. Tassin explained, “This credit aims to promote the purchase of vehicles made in America. Taxpayers will need to provide the vehicle identification number, and the loan must be taken out by the vehicle’s purchaser.”
For those who owe taxes to the IRS and are strapped for cash, filing by April 15 and paying as much as possible is advisable. They can also opt for balance payment methods like credit cards or IRS installment agreements. Dr. Tassin pointed out that “there is currently a fee to use this option, and it doesn’t exempt you from accruing interest.”
Consumer Reports highlights the necessity of knowing which changes apply to your personal situation, verifying tax withholdings, keeping accurate records, and filing on time with the correct payment plans. Another change for this year is increased transparency regarding basic math errors. If there’s a mistake on your return, the IRS must issue a notice detailing the error, and taxpayers have 60 days to challenge it.
