Tax season is already here, and filers may notice some changes.
January is the sign of new beginnings, but filing your taxes is one of the last times you are forced to look in the rearview mirror.
President Donald Trump’s Big Beautiful Bill has lots of new tax provisions.
One of the biggest is the No Tax on Tips portion.
“A lot of the misunderstanding is that No Tax on Tips is, people think that they don’t have to pay tax on any of their tips, but it is limited to $25,000 for the year,” said Dena Wiberg, Senior Tax Analyst.
Those who make over $150,000 will start to phase out.
Another big component is the No Tax on Overtime, which has similar restrictions. It is limited to $12,500, and the tax deductions are not for the full overtime wage.
“It’s only the half part of the time and a half that’s not taxed, not the full time and a half,” Wiberg said.
The overtime piece also includes that those who make more than $150,000 start to phase out.
While tips are typically on your W-2 statements, the overtime wages are causing some confusion about how it is supposed to be reported.
“It’s still kind of in the works of what’s being reported,” Wiberg said. “Where I’ve seen it in box 14 on W-2s, but I am encouraging people to get their last paycheck stub and bring that in with them.”
If you’ve been paying a car loan, there is a chance you can get credits, but there is a catch.
The loan must have originated after December 31, 2024, and it must have had its final assembly in America.
You can check that from your vehicle inspection number or VIN.
In another section, seniors over 65 years old are eligible to receive an additional $6,000 in standard deductions.
There is also something completely different this year when you file your taxes.
New parents will have the option to opt their child in for a Trump Account.
The account acts sort of like IRAs. Children born between January 1, 2025, and December 31, 2028, will be granted $1,000 from the Department of the Treasury to the child’s account.
Parents don’t have to make contributions, but can add up to $5,000 a year.
To learn more about all of the changes from the BBB, click here.
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