Charitable Contribution deductions for non-itemizers
The 2025 Tax Act introduces a permanent charitable deduction for non-itemizers, allowing individuals who do not itemize deductions to claim a deduction of up to $1,000 ($2,000 for joint filers) for cash contributions made directly to public charities. This new provision, effective in 2026, enables taxpayers to benefit from a charitable deduction even if they claim the standard deduction, rather than itemizing. The deduction is a below-the-line deduction, meaning it is subtracted from adjusted gross income to arrive at taxable income, and is only available for cash gifts to public charities.
The 2025 Tax Act also introduces a new floor for charitable contribution deductions for individuals who itemize, beginning in 2026. Under this provision, an individual’s otherwise deductible charitable contributions must be reduced by 0.5% of their adjusted gross income (AGI) for the tax year. In other words, only the portion of charitable contributions that exceeds 0.5% of AGI is deductible. The Act also allows for the carryforward of contributions disallowed by the 0.5% floor.
Car Loan Interest Deduction
The 2025 Tax Act introduces a new, temporary deduction for individuals (including non-itemizers) for interest paid on loans used to purchase new personal-use vehicles. For tax years 2025 through 2028, taxpayers may deduct up to $10,000 of car loan interest per year, with the deduction phasing out for single filers with modified adjusted gross income (MAGI) above $100,000 and joint filers above $200,000. To qualify, the loan must be incurred after December 31, 2024, for the purchase of a new vehicle that is assembled in the United States, has a gross vehicle weight rating under 14,000 pounds, and is secured by a first lien. The vehicle must be for personal use, and the taxpayer must report the vehicle identification number (VIN) on their return. The deduction is reported as an adjustment that reduces adjusted gross income directly on the main tax return.
For businesses and self-employed individuals, the 2025 Tax Act does not change the rules for deducting car loan interest. Interest on a car loan remains deductible as a business expense to the extent the vehicle is used for business purposes, and this deduction is claimed on Schedule C or the relevant business return, subject to allocation between business and personal use.
SALT Deduction
The state and local tax (SALT) deduction has seen important changes under the recent OBBB legislation. For individual taxpayers, the SALT deduction cap has been raised to $40,000 for 2025, with small annual increases through 2029, and a phaseout for those with income above $500,000. However, the deduction cannot be reduced below $10,000, and the cap is scheduled to revert to $10,000 in 2030. For owners of pass-through entities (such as partnerships and S corporations), many states offer a workaround called the pass-through entity tax (PTET). This allows the entity to pay state taxes at the entity level, which are then fully deductible as a business expense on the federal return—effectively bypassing the individual SALT cap for those taxes. The OBBB preserves this PTET workaround, so there is no new federal limit on the amount of state tax a pass-through entity can deduct at the entity level. In summary, while individuals still face a (now higher) cap on their SALT deduction, pass-through entities can continue to deduct state taxes at the entity level without limitation, reducing the taxable income that flows through to owners.
Moving Expense Deductions
The One Big Beautiful Bill (OBBB) has made the moving expense deduction exclusively available to active-duty military members who move due to a permanent change of station remain eligible. This includes moves:
- From home to a first post of duty
- Between duty stations
- From the last post of duty back home (within one year of discharge)
Eligible expenses include transportation, storage, and lodging—but not meals
