You probably assume familiar tax breaks will stick around, but this article shows how several routine deductions are shifting and what that means for your wallet. You’ll learn which common deductions are shrinking or vanishing so you can spot surprises before they hit your next return.
Keep this short guide handy as you move through changes to state and local deductions, vehicle interest rules, overtime and tip income treatments, and new lines on IRS forms that replace older breaks. You’ll get practical alerts and next steps so you can adjust withholding, recordkeeping, or tax planning without scrambling later.
State and Local Tax (SALT) Deduction caps phasing out for incomes above $500,000
If your modified adjusted gross income tops $500,000, the expanded SALT cap begins to phase out, so you’ll lose part of that extra benefit.
The phaseout hits fully at higher thresholds, returning the cap closer to prior limits for the highest earners.
Plan for reduced SALT relief if you expect income near or above those marks.
Talk to a tax pro about timing income, state tax payment strategies, or passthrough entity elections to protect deductions.
Car Loan Interest Deduction disappearing for AGI over $100,000 (singles) and $200,000 (joint)
If your modified adjusted gross income tops $100,000 for single filers (or $200,000 if you file jointly), the new car loan interest deduction phases out and may vanish for you.
That cap means you could lose access to up to $10,000 of deductible interest even if you bought a qualifying vehicle in 2025–2028.
Check your MAGI early in the year and run numbers before you sign a loan.
The IRS has issued guidance on the deduction that explains the phaseout mechanics and eligibility.
Overtime Pay Deduction fading away for earners above $150,000 (single) and $300,000 (joint)
You can deduct up to $12,500 ($25,000 if married filing jointly) of qualified overtime pay for 2025–2028, but the benefit shrinks as your income rises.
The deduction phases out starting at a modified adjusted gross income of $150,000 for singles and $300,000 for joint filers, reduced by $100 for every $1,000 over those thresholds.
If your MAGI sits well above the limits, you may lose the deduction entirely; check IRS guidance on the new rule for details.
Tip Income Deductions reducing for higher income taxpayers
If you earned tips in 2025–2028, you may qualify to deduct up to $25,000, but that amount shrinks as your income rises. The deduction phases out once your modified AGI exceeds $150,000 ($300,000 for joint filers), reducing the benefit by $100 for every $1,000 over the threshold.
Once your income passes the upper limit, you lose the deduction entirely. For details on calculating qualified tips and phase-out rules, see the IRS guidance for taxpayers claiming deductions for qualified tips and overtime.
Certain popular itemized deductions removed in 2026
You’ll lose a few familiar itemized breaks starting in 2026 because law changes restore limits that had been lifted.
High-income earners may see state and local tax deductions and other itemized amounts reduced under the revived limitation from the One Big Beautiful Bill; plan accordingly.
Review your 2025 giving, medical spending, and taxable state payments to decide if accelerating or delaying deductions helps you.
See the IRS announcement on 2026 adjustments for details and exact thresholds: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
New deductions reported on IRS Schedule 1-A replacing old ones
You’ll now report four new deductions on Schedule 1-A that the IRS created for 2025 returns.
These deductions cover tips, certain overtime, car loan interest, and a seniors’ deduction.
If you previously used older, narrow deductions, those amounts may no longer apply and instead flow through Schedule 1-A.
Check the IRS draft form for line-by-line instructions to know where to enter each deduction: https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf
Additional Senior Deduction phasing out past $75,000 AGI single filers
If you’re 65 or older, the new $6,000 senior deduction can lower your taxable income.
That benefit begins phasing out once your modified adjusted gross income (MAGI) exceeds $75,000 for single filers.
The phaseout reduces the deduction incrementally as your MAGI rises, and it disappears entirely at higher thresholds.
Check your income before big transactions—Roth conversions or large distributions can push you past the cutoff.
For official details, review the IRS summary of the One, Big, Beautiful Bill Act.
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