Summary: From higher deductions to new rules on tips, overtime, and car loans, learn how recent tax changes may affect Credit Union members and their 2025 tax returns.

Most Americans know that the tax code changes yearly, and keeping up with such a moving target can be difficult. Here are some of the changes that will affect your 2024 taxes according to Mike Jesowshek, a CPA and host of the “Small Business Tax Savings” podcast. As always, consult a tax professional with any questions or clarifications.

A dash of SALT

Legislators made a big deal about the State and Local Tax (SALT) Deduction going up to a maximum of $40,000 this year. It's a big deal. Single, head of household or married filing jointly filers who itemize their taxes and have a modified adjusted gross income (MAGI) less than $500,000 can deduct up to $40,000 that they’ve paid state and local income taxes, property taxes or sales tax. “This is one of the big ones for people who live in high income tax and property tax states,” Jesowshek says.

Extra Deduction for Seniors

Starting this year through 2028, people 65 and older with income under $75,000 (single) and $150,000 (married filing jointly) can take an additional deduction of $6,000. This new deduction is on top of the current standard deduction of $2,000 for single taxpayers and $3,200 for couples already in place, and applies to those who itemize and those who don’t. The deduction phases out as income rises, with it completely going away at $175,000 and $250,000 for single and married filing jointly taxpayers, respectively.

Taxes on Tips

The estimated 6 million employees and self-employed people who get tips as part of their compensation can now deduct those qualified tips for a maximum deduction of $25,000. If you’re self-employed, the deduction can’t exceed your net income. The deduction phases out for taxpayers with a MAGI more than $150,000 or $300,000 for single and married joint filers, respectively. Your profession matters, though, Jesowshek says. “It’s mostly for your service-based industries, like wait staff, bartenders, stylists, travel guides or massage therapists.”

No Tax on Overtime

If you’re a nonexempt hourly employee who's filing single or married filing jointly you can now deduct up to $12,500 or $25,000 as long as you earn under $150,000 or $300,000, respectively. The deduction applies to  itemizing and non-itemizing taxpayers. There’s a catch, though. If you usually make $20 an hour and you earn time-and-a-half for a single hour ($30), you can only write off the and-a-half portion, or $10. 

Car Loan Interest

Just like you can deduct mortgage interest, you can now deduct up to $10,000 of any interest paid on a qualifying first lien new car loan. This is available even if you only take a standard deduction and don’t itemize. The only automobiles that qualify are those assembled in the United States intended for personal use. Tap the National Highway Traffic Safety Administration’s VIN Decoder to help confirm where your car, minivan, SUV, pickup truck or motorcycle under 14,000 pounds was built. The deduction is available to people with MAGIs under $100,000 for singles and $200,000 for married filing jointly. It phases out and disappears completely at $150,000 and $250,000, respectively.

Higher 1099-K Thresholds

Over the past few years, there has been some confusion as to whether or not your use of PayPal,™ CashApp™ and Venmo® would trigger 1099s. People found out that if they used the payment options and received more than $5,000, the use would be reported in the form of a 1099 — difficult for anyone who often collected money for gifts, football boxes or restaurant bills. For 2025, the rate reverted to more than $20,000 in gross payments in 200 or more separate transactions in the calendar year.

Some states — Maryland, Massachusetts, Vermont and Virginia — have their own $600 limit, regardless of transaction count. Illinois requires a 1099 for more than $1,000 worth of transactions. It should go without saying that you still need to report any income that comes into these platforms, even if you don’t receive a 1099.

Standard Deductions are Rising

Taxpayers will see an increase in the standard deduction. Single taxpayers and married individuals filing separately have a standard deduction of $15,750 up from $14,600 in 2024. For heads of households, the standard deduction goes up to $23,625 from $21,900, while married filing jointly couples will see their standard deduction rise to $31,500 from $29,200.

Crypto Taxes Get Real

A new rule for digital assets means you’re going to see a new form coming your way if you traded or used crypto coins. Designated Form 1099-DA will make it easier to file your taxes. While crypto has always been taxable, this new form means it’s easier for you to keep track of your income.

Preparing to File 

Doing your taxes is much easier when you plan ahead and gather what you need before the April 15 deadline. Below, find a list of 12 things that will make tax preparation less taxing.

•    W-2s and 1099s from work and savings. W-2s come from your employer while  1099s come from anyone you’ve done freelance work for. Investing forms such as 1099-INT and 1099-DIV come from bank interest and dividends, respectively. 
•    Bank statements 
•    Mortgage statements and Form 1098 interest forms
•    Crypto transaction records
•    Sale documents, if you've bought or sold a property
•    Home office expenses if you are a freelancer or own your own business
•    Charitable deduction receipts
•    Medical and dental expenses as well as health insurance forms (1095-A/B/C) and HSA contributions and distributions
•    Childcare expenses and your provider’s EIN
•    Social Security numbers for you, your spouse, and any children
•    Retirement contribution records and Social Security statements
•    Prior tax year returns, especially if you carried over losses or credits   

Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither American Airlines Federal Credit Union nor any of its representatives may give legal or tax advice.

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