Many people wait until the new year to start preparing and thinking about their taxes. Savvy stewards spend some portion of the last quarter of each year planning how to avoid, if not reduce their tax liability when April 15th comes around. Planning now can be the one action item that separates those who owe from those who enjoy their freedom from Uncle Sam. Today’s Money Monday only highlights some of the personal tax changes recorded in the new tax bill signed into law. Here is some of what lies ahead.
SALT
No I am not referring to a food ingredient. SALT is short for State and Local Tax. Prior to this year, you were only allowed to deduct up to $10,000 on your tax return when it came to state and local taxes, when filing your federal tax return. Well starting this year you will be allowed to deduct up to $40,000 in state and local taxes on your federal tax return. That’s good news and should provide relief when you file next year.
Vehicle Interest
If you are considering purchasing a vehicle this may be the year to execute on that plan. There is now a loan interest deduction of up to $10,000 per year starting this year. You should note prior to this tax change, this deduction was not allowed. However, there are a few caveats required to claim this deduction. The interest paid must be for a post 2024 loan; it must be for a qualified vehicle person to use, and the final assembly of the vehicle must be in the United States. To know whether a vehicle’s final assembly was in the United States, its VIN Number must start with the numbers 1, 4 or 5. Once you can get past all those qualifications, the deductions are available. One more piece of good news, related to this deduction and that is, whether you itemize or not, the deduction is available.
Age Benefit
While age is just a number, there are some new tax benefits associated with those 65 years of age and older. There is now a senior tax deduction of $6,000 whether you claim social security or not.
Charitable Contribution
There has been a big change in your itemized charitable contribution deduction calculation starting in tax year 2026. Starting in 2026, to the extent that your charitable contributions exceed 0.5% of your Adjusted Gross Income (AGI), it will be deductible.
Let me use this example to explain. In the year 2026, John donated $700 and has an AGI of $100,000. How will this work? The charitable contribution floor for John would be $500, which is, 0.5% his AGI. Because the tax change in 2026 now establishes a floor; it now means that only $200 of John’s $700 donation will be deductible as a charitable contribution in tax year 2026. Currently, there is no charitable floor, and therefore John’s total contribution of $700 would be fully deductible.
Knowing this information now, may influence how much you donate in 2025 versus in 2026.
529 Changes
The new tax bill provided additional individual provisions to the 529 tax advantage saving account for educational expenses. Among the new provisions your 529 account could now be used for post secondary credentials and expenses to maintain those credentials. Starting July 4th, 2025 your 529 account can now be used for credentials such as Certified Public Accountants (CPA) exams and to maintain your license or to pay for your Bar courses, exams and maintaining your license credentials. The new changes also include:
- paying for curriculum and instruction materials,
- qualified tutoring,
- standardized testing fees such as related to the SAT and ACT,
- non-degree credentials such as HVAC, plumbing, electrical and welding.
What’s also great is that you can change the beneficiary of your 529 account from your child to yourself for educational expenses.
Takeaways
There are three points to take away from this article. Some of the tax changes take effect immediately, meaning for tax year 2025; some of the changes take effect in 2026 and some of the changes expire in a few years. What I have shared today impacts individuals and not business. For those of you who are business owners, another article will address business tax changes. My suggestion would be for you to schedule a meeting and connect with your accountant or tax preparer, prior to December 31, 2025.
WHAT’S UP!
Today’s What’s Up is about charities that support those who serve the military. The first one is Houses For Our Toops. This organization builds homes specifically designed for post 9/11 veterans who have been severely injured. The next is Semper Fi & America’s Fund. This organization provides financial assistance to veterans families and helps with career transactions. And that’s what’s up!
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2025 All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.
