Jeff Keenan
Welcome to Keenan Tax Service.
SUBMIT YOUR TAX DOCUMENTS
2025 TAX LAW CHANGES
For 2025, there were many major tax law changes. I will highlight some of the most prominent changes here and let you know what you need to do about each of them. Before I do that, however, I need to address the rumors that are going around about some of the One Big Beautiful Bill tax law changes.
Tax Rumors. While many of the provisions will help some taxpayers save on tax, there are misunderstandings of how some of the tax savings are calculated. Many internet and podcast “experts” do not know how these deductions and credits work. I have heard people talk about a $6,000 credit for people age 65 or older, for example. But it is important to note that the $6,000 amount is a reduction in taxable income, and NOT a credit. Deductions reduce the amount of income that is taxed. Credits are generally an additional refund amount applied to tax due or paid to the taxpayer as a refund. The difference between the two can be a significant amount. I have also heard the false indicator that all tips and overtime are not taxable. The tip and overtime deductions have limits, both to the amount that can be deducted and the amount of total income for the taxpayer. Either or both deductions can also be phased out, so even if you qualify you might not receive the full benefit. The bottom line is that the implementation of deductions and credits is more complicated than non-tax-experts might like you to believe. Because of the various elements of your tax return (age, income, deductions, credits, etc.), please note that I cannot give you an answer on your tax return until I have all of your tax information.
Additional Deduction for Age 65+ Taxpayers age 65 or older on December 31, 2025 may receive an additional deduction, up to $6,000 per taxpayer for the Federal Form 1040 filing. The deduction is limited to taxable income. Qualifying taxpayers will not need to provide me any additional information.
Qualified Tip Income Deduction. Eligible taxpayers may deduct up to $25,000 of income derived from tips on the Federal 1040 filing. The tip income should be identified on your W-2. If you do not see tip income accurately reported on your W-2 (see box 7 and box 14), ask your employer for a statement of tip income. Taxpayers cannot take this deduction without proof, so I will need documentation to complete this on your tax return. The deduction can be limited based on total income.
Overtime Pay Deduction. Eligible taxpayers may deduct up to $12,500 of income derived from overtime on the Federal 1040 filing. Overtime income should be identified on your W-2. If you do not see overtime income accurately reported on your W-2 (see box 14), ask your employer for a statement of overtime income. Taxpayers cannot take this deduction without proof, so I will need documentation to complete this on your tax return. Please note: the deduction is for the “one-half” portion of your time-and-a-half of overtime pay, so the deduction will not be for all the overtime pay. In addition, the deduction can be limited based on total income.
Vehicle Loan Interest Deduction. If you purchased a new vehicle after December 31, 2024, and you used a loan for this purchase, the interest on the loan (up to $10,000) is deductible. Your lender should send you a form indicating the qualified interest amount. Please send a copy of this form to me.
Itemized Deductions. In recent years, the deduction for state and local taxes paid has been limited to $10,000. Beginning for 2025 tax year, this limit has been increased to $40,000. What this means to you is that you might be able to use itemized deductions that have been limited in the past. Everyone is eligible for the Standard Deduction. However, if the total of your itemized deductions (limited medical expenses, state and local taxes, mortgage interest, etc.) exceeds the Standard Deduction amounts, you might be able to use a larger deduction. While this will not impact most taxpayers, if you have high earnings or a large real estate tax bill, please send me the documentation and I can calculate if the Standard Deduction or the Itemized Deduction will be better for you. Again, most people will not benefit from this change, but we want to review this if your deductions will be close.
Child Tax Credit Increase. The Child Tax Credit has increased from a maximum of $2,000 to a maximum of $2,200. For most people, you will not need to do anything to get this increased credit.
E-SIGNATURE FOR COMPLETING E-FILE
Welcome to Keenan Tax Service.
- 24 years tax filing experience.
- Preparation and planning.
- Over 5,000 hours of tax research.
SUBMIT YOUR TAX DOCUMENTS
2025 TAX LAW CHANGES
For 2025, there were many major tax law changes. I will highlight some of the most prominent changes here and let you know what you need to do about each of them. Before I do that, however, I need to address the rumors that are going around about some of the One Big Beautiful Bill tax law changes.
Tax Rumors. While many of the provisions will help some taxpayers save on tax, there are misunderstandings of how some of the tax savings are calculated. Many internet and podcast “experts” do not know how these deductions and credits work. I have heard people talk about a $6,000 credit for people age 65 or older, for example. But it is important to note that the $6,000 amount is a reduction in taxable income, and NOT a credit. Deductions reduce the amount of income that is taxed. Credits are generally an additional refund amount applied to tax due or paid to the taxpayer as a refund. The difference between the two can be a significant amount. I have also heard the false indicator that all tips and overtime are not taxable. The tip and overtime deductions have limits, both to the amount that can be deducted and the amount of total income for the taxpayer. Either or both deductions can also be phased out, so even if you qualify you might not receive the full benefit. The bottom line is that the implementation of deductions and credits is more complicated than non-tax-experts might like you to believe. Because of the various elements of your tax return (age, income, deductions, credits, etc.), please note that I cannot give you an answer on your tax return until I have all of your tax information.
Additional Deduction for Age 65+ Taxpayers age 65 or older on December 31, 2025 may receive an additional deduction, up to $6,000 per taxpayer for the Federal Form 1040 filing. The deduction is limited to taxable income. Qualifying taxpayers will not need to provide me any additional information.
Qualified Tip Income Deduction. Eligible taxpayers may deduct up to $25,000 of income derived from tips on the Federal 1040 filing. The tip income should be identified on your W-2. If you do not see tip income accurately reported on your W-2 (see box 7 and box 14), ask your employer for a statement of tip income. Taxpayers cannot take this deduction without proof, so I will need documentation to complete this on your tax return. The deduction can be limited based on total income.
Overtime Pay Deduction. Eligible taxpayers may deduct up to $12,500 of income derived from overtime on the Federal 1040 filing. Overtime income should be identified on your W-2. If you do not see overtime income accurately reported on your W-2 (see box 14), ask your employer for a statement of overtime income. Taxpayers cannot take this deduction without proof, so I will need documentation to complete this on your tax return. Please note: the deduction is for the “one-half” portion of your time-and-a-half of overtime pay, so the deduction will not be for all the overtime pay. In addition, the deduction can be limited based on total income.
Vehicle Loan Interest Deduction. If you purchased a new vehicle after December 31, 2024, and you used a loan for this purchase, the interest on the loan (up to $10,000) is deductible. Your lender should send you a form indicating the qualified interest amount. Please send a copy of this form to me.
Itemized Deductions. In recent years, the deduction for state and local taxes paid has been limited to $10,000. Beginning for 2025 tax year, this limit has been increased to $40,000. What this means to you is that you might be able to use itemized deductions that have been limited in the past. Everyone is eligible for the Standard Deduction. However, if the total of your itemized deductions (limited medical expenses, state and local taxes, mortgage interest, etc.) exceeds the Standard Deduction amounts, you might be able to use a larger deduction. While this will not impact most taxpayers, if you have high earnings or a large real estate tax bill, please send me the documentation and I can calculate if the Standard Deduction or the Itemized Deduction will be better for you. Again, most people will not benefit from this change, but we want to review this if your deductions will be close.
Child Tax Credit Increase. The Child Tax Credit has increased from a maximum of $2,000 to a maximum of $2,200. For most people, you will not need to do anything to get this increased credit.
E-SIGNATURE FOR COMPLETING E-FILE
- IRS E-signature compliance. If you want to complete your tax filing using e-signature instead of signing paper forms, you can do so. However, IRS compliance requires that we use a Knowledge-Based Authentication system (KBA). The KBA will ask you knowledge-based questions that only you will know the answers to (similar to questions you need to answer if you login to the Social Security website). If you wish to do an electronic signature, please let me know when you send your tax documents. There is an additional charge of $5 per tax return packet. E-signature is not required and taxpayers can still submit a print-and-sign documents