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As we turn the page on 2025 and begin a new and what will be very eventful 2026, we take time to pause and reflect on what was and what will be.
The second Trump administration has been eventful thus far, to say the least. The implementation of tariffs as a method of generating revenue and equalizing trade among the US and nearly every nation on earth has upended decades of commerce practices. All with his stated goal of bringing manufacturing back to the US, along with trillions of dollars in foreign investment to accomplish it.
Until we as a country produce all the merchandise we use, American businesses and consumer will have to deal with added costs on goods not produced in the United States. Ask any farmer or rancher how they feel about tariffs as they await government checks to help offset their losses because of tariffs starting in February.
The “One Big Beautiful Bill” (OBBB) Act signed into law on July 4, 2025, will be fully implemented in 2026. It will undoubtedly benefit nearly all taxpayers whose income is below $150,000 if single person or $300,000 if married filing jointly.
The biggest changes that impact individual taxpayers are the increase in the standard deduction, no tax on tips and overtime, and deductibility of car loan interest.
If you are a worker employed in a job “customarily and regularly” involving tipping you can exclude up to $25,000 of tip income from your taxable income. (If your income is under $150,000 if you are single or $300,000 married filing joint). If you are an hourly employee and receive overtime pay a similar deduction is in place. If you are single, up to $12,500 in overtime income is excluded in taxable income. If you are married the deduction increases to $25,000. Only the portion of hourly rate that is more than normal hourly rate complies. So, if you are paid time and half for overtime and your hourly rate is $20 per hour only $10 of the overtime hourly rate is deductible, not the entire $30 per hour.
Deductibility of car loan interest is another provision of the act that will benefit those who purchased a new vehicle in 2025. To be eligible the vehicle must have been assembled in the US and be under 14,000 pounds. If you bought an eligible new vehicle in 2025 you may be able to deduct up to $10,000 in interest from your taxable income.
The deduction for car loan interest phases out if you are single and your income exceeds $100,000 or married and it exceeds $200,000.
If you are unsure of where the final assembly of your vehicle occurred you can check it out at www.vpic.nhsta.cot. gov and click vPIC decoder. Put in model year and VIN of your vehicle to determine whether it is eligible.
The increase of the standard deduction will benefit everyone regardless of filing status. The increase is magnified for those 65 or older at the end of the year 2025. For everyone, the standard deduction increases for single filers from $14,600 to $15,750 and for married from $29,200 to $31,500. Head of Household increases from $21,900 to $23,625.
But if you are 65 or older and are single and have income under $75,000 or married with income under $150,000 you can increase your deduction to $20,600 if single or $43,500 if married. A big jump for us “older” people.
The One Big Beautiful Bill will allow Americans to keep more of their hard-earned money, which is a good thing. What is unknown with any high degree of certainty is the fiscal impact on the Federal Budget.
My comments in this article are based on information from IRS website. I strongly recommend getting tax advice or preparation of your taxes from someone more knowledgeable than me .
Hang on to your wallets, 2026 is going to be interesting !
