The One Big Beautiful Bill Act (OBBBA) has introduced several temporary tax breaks available from 2025 through 2029, offering significant savings opportunities for those who meet strict income limits and phaseout thresholds. Here are four strategies to maximise your 2025 tax return and plan ahead.
The state and local tax (SALT) deduction cap is temporarily raised from $10,000 to $40,000 for married couples filing jointly and single filers. However, this benefit begins to phase out for taxpayers with a modified adjusted gross income (MAGI) over $500,000 and disappears entirely at $600,000. If your total itemised deductions exceed the standard deduction ($31,500 for couples, $15,750 for singles), itemising may be worthwhile.
New above-the-line deductions (available whether you itemise or not) target middle-income workers. The qualified overtime pay deduction is capped at $25,000 for couples, $12,500 for singles, and only applies to the 'half-time' portion of overtime pay. It phases out between $300,000 and $550,000 MAGI for couples. The qualified tips income deduction allows up to $25,000 of formally reported tips, phasing out for couples between $300,000 and $550,000 MAGI. An auto loan interest deduction of up to $10,000 is available for loans on new US-assembled vehicles, phasing out between $200,000 and $250,000 for couples.
Seniors aged 65 or older can claim a temporary deduction of up to $12,000 for married couples ($6,000 per spouse) or $6,000 for singles. This deduction begins to phase out at $150,000 MAGI for couples and $75,000 for singles. Be cautious with Roth conversions in 2026, as they could push your income over the threshold and eliminate this deduction entirely.
To keep your MAGI within qualifying ranges for 2025, consider making HSA contributions before the April 2026 deadline or deductible IRA contributions if eligible. For 2026 planning, defer large capital gains, delay stock option exercises, maximise 401(k) and HSA contributions, and postpone Roth conversions that would exceed phaseout limits. With careful planning, these temporary provisions can yield substantial tax savings.
