$40K Deductions and Car Write-Offs? Yes, Please! How to Cash In on the BBB
Big changes are here and they’re worth your attention. The newly signed One Big Beautiful Bill Act of 2025 delivers sweeping tax reforms that could mean thousands in savings for families, homeowners, and everyday workers. If you’ve been eyeing a new car, now’s the moment as interest on qualifying auto loans is finally deductible. And for California homeowners, the mortgage interest deduction cap has jumped from $10,000 to a whopping $40,000. This is a game changer for Californians where property prices often defy gravity. Read on for a break down how to make the most of these new benefits and ensure you’re not leaving money on the table.
Property Tax Deduction
Homeowners will be able to deduct up to $40,000 in state and local taxes, up from a cap of $10,000. The higher cap takes effect for 2025 and lasts through 2029, and it will be increased by one percentage point each year until returning to the $10,000 cap in 2030. The higher cap phases out for homeowners with MAGI above $500,000 ($250,000 for a married individual filing separately). Taxpayers with MAGI of $600,000 or more will be ineligible for the increase. You must itemize to claim this deduction.
Savings Accounts for Kids
The law creates a new tax-advantaged savings account for children. Until the child turns 18, parents, grandparents and others can contribute up to $5,000 a year to the account, where the money is invested in a fund that tracks a stock index and grows tax-deferred. Parents of children born between January 1, 2025, and December 31, 2028, will be eligible to receive $1,000 in federal seed money to start the account.
Deduction on Car Loan Interest
Taxpayers will be eligible to deduct up to $10,000 in interest on loans for cars purchased between 2025 and 2028. You don’t have to itemize to claim this deduction, but it’s available only for loans taken out to buy new cars assembled in the United States. The deduction phases out for individuals earning more than $100,000 or married couples making over $200,000.
Tip Income
Eligible tipped workers will be able to deduct up to $25,000 in tips a year from 2025 through 2028. The tax break will decrease by $100 for every $1,000 of MAGI over $150,000 for single filers and $300,000 for joint filers. You don’t need to itemize to claim this deduction.
Overtime Pay
From 2025 through 2028, workers will be allowed to deduct up to $12,500 a year in overtime pay, or $25,000 if they’re married and file jointly. This phases out for single filers with MAGI of more than $150,000 and joint filers with MAGI over $300,000.
Larger Standard Deduction
Starting in the 2025 tax year, those who are 65 or older will be eligible for an additional standard deduction of $6,000. The bonus deduction comes on top of an existing increase in the standard deduction of $2,000 for single filers who are 65 or older; for married couples who file jointly, it’s $1,600 for each spouse 65 or older.
So whether you’re a die-hard supporter or someone who’s spent the last decade rolling your eyes at every Trump headline, Uncle Sam doesn’t check your voter registration before issuing that refund. These tax cuts apply to everyone, even you with the “Not My President” bumper sticker. So as you cash that check or deduct that $40K in mortgage interest, maybe give a tiny nod to the Big Beautiful Bill. You don’t have to love the chef to enjoy the meal.
Carol Pefley
Candidate for ca State Assembly District 28
