Knowing What Counts Podcast

How The 2025 “Big Beautiful Bill” Changes Your Taxes, From SALT To Overtime

• Tim Provost, CPA • Episode 22

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Big Beautiful Bill – A Deeper Dive for Individual Tax – Tax Senior Maggie Gladu

Tax law just changed in ways that can meaningfully shift your refund, your withholdings, and the timing of your biggest money moves. We invited MP CPAs Tax Senior Maggie Gladu to decode the 2025 “Big Beautiful Bill” and translate headlines into clear actions you can take before year-end. From a quadrupled SALT cap to new above-the-line deductions, we separate what helps, what phases out, and what you should plan around right now.

We walk through who truly benefits from the SALT cap rising to $40,000, why itemizers in high-tax states may gain most, and how the phaseout between $500k and $600k AGI changes the calculus. Mortgage interest rules hold steady for acquisition debt up to $750k, while home equity interest remains off the table—documentation matters more than ever. A new auto loan interest deduction (up to $10,000) could reduce taxable income without itemizing if you buy a qualifying U.S.-assembled vehicle from 2025–2028, subject to income limits.

Social Security taxation stays the same, but seniors get a $6,000 above-the-line bonus with phaseouts. Service and shift workers see new opportunities: deductions for qualified tips (up to $25,000) and overtime ($12,500 single, $25,000 joint) across 2025–2028, each with clear AGI thresholds. We also unpack “Trump accounts,” long-term custodial accounts designed to seed savings for children born 2025–2028 and minors under 18, with contributions that can grow for goals like a first home.

Don’t miss the deadlines: residential clean energy, energy-efficient home improvements, and EV credits end after 2025. Then 2026 ushers in above-the-line charitable deductions for non-itemizers, a new charitable floor for itemizers, and a cap on itemized deductions for top-bracket taxpayers. We close with practical timing strategies—prepaying taxes, scheduling gifts, and aligning income—to keep you under key phaseouts.

If this helped you get clarity, follow the show, share it with a friend, and leave a quick review. Questions about your AGI range or deduction timing? Send them our way and we may answer on a future episode.

To learn more about MP CPAs visit:
https://thempgroupcpa.com/
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413-739-1800

SPEAKER_00:

Welcome to the Knowing What Counts Podcast, the place where expert guidance makes smart financial decisions. Whether you're a high net worth individual or a thriving business, the experts at MPCPAs are here to help you protect and optimize your wealth. Let's get started. Because success begins with knowing what counts.

SPEAKER_02:

Welcome back, everyone. I'm Sophia Yvette, co-host and producer, back in the studio with Maggie Gladue, Tax Senior at MPCPAs. Hi, Maggie. How's it going?

SPEAKER_01:

Good. How are you?

SPEAKER_02:

I'm good. Maggie, let's go ahead and dive in today. Before we get started, why don't you introduce yourself to the audience?

SPEAKER_01:

Hi, I've been at MPCPAs for 10 years. I have my master's in taxation from Bentley University. I really enjoy tax research and I work on many corporate partnership and individual returns. So today I wanted to talk about the one big beautiful bill that became law in July of 2025. So we're still sorting through this, but today I want to go over the individual provisions for individual taxpayers.

SPEAKER_02:

Amazing, Maggie. Now, one of the hottest topics on that note is the big beautiful bill and its changes to the salt deduction. Can you talk a bit about the salt deduction and how this will impact people?

SPEAKER_01:

Yes, definitely. That has been a lot of what people are talking about. There's two types of deductions for your taxes. One is called above the line, and one is below the line. The line that they're referring to is AGI. So above the line deductions, all taxpayers can take. Below the AGI line means you must be able to itemize. So when you file your taxes, you take either a standard deduction or an itemized deduction. The standard deduction is based on your filing status and it's a dollar amount. So single people would take a$15,570 standard deduction in 2025. Married filing joint can take a$31,500 deduction. So if you take a standard deduction, this salt provision doesn't apply to you at all. But if you are going to be itemizing, which means your deductions would exceed those amounts I just gave you, you would now benefit from having a higher tax limit. So itemized deductions, there's some common ones: medical, mortgage interest, charitable contributions, and state taxes, including real estate and income taxes. So the salt deduction stands for state and local income tax deduction. Taxpayers were limited to$10,000, and now they are going to be able to take a$40,000 deduction. So people from Connecticut, California, Mass, Maryland, and New York are really going to benefit because we have higher uh real estate taxes in those states. Unfortunately, not all taxpayers will benefit because this deduction has what we call a phase out. Phaseouts refer to income limits. So higher income taxpayers cannot always take. So the$40,000 salt limit will start to phase out for people with modified adjusted gross income between$500,000 and$600,000. So at$600,000 of modified adjusted gross income, your salt deduction would go back to$10,000. So there are some planning opportunities for taxpayers in this range, less than$500,000 of AGI, that uh it might make sense for them to pay their taxes a little early, not wait until 2026, pay in 2025 to get the full benefit. Some other itemized changes in the big beautiful bill are uh mortgage interest. It keeps the same rules we've been operating with, it just codified them. So home equity loan interest, where you borrow against your home, but it's not for the purchase of the home, that is not deductible. You cannot take an itemized deduction for that. Home acquisition debt, where you borrow to buy a home or a second home, you can take up to$750,000 and fully deduct that interest. So those are some changes, including the salt and the mortgage interest.

SPEAKER_02:

Now, Maggie, you mentioned mortgage interest. Were there any changes to mortgage interest deductions? And isn't there something new on auto loan interest deductions?

SPEAKER_01:

Yes. So the mortgage interest, like we said, is just codified the rules we had. You can deduct um up to 750 of home acquisition debt, the interest on that debt. Um, and you no longer can deduct um home equity loans. There is a new deduction called called auto loan interest deduction. This is above the line, so it's not an itemized deduction. It is a deduction that you will get in addition to your standard deduction. So um you don't need to itemize. Uh, the law now allows for taxpayers to deduct up to 10,000 per year for auto loan interest. It does have some caveats. It is on new cars. They had their final assembly in the United States and they weigh less than 14,000 pounds. The vehicle must have been purchased between January 1st of 2025 and December 31st of 2028. And it again has that phase out we were talking about. So if your modified uh adjusted gross income is over 100,000 if you're single, uh, you will get up to some deduction until you get to 150 of AGI. Then there's no deduction. Married filing joint taxpayers, the limits begin at 200,000 of AGI and will be completely eliminated at 250,000 of AGI. So anyone in the market for a new car, if you fit into these income ranges, you could be able to deduct up to 10,000 of that interest.

SPEAKER_02:

Wow. Now there were many praising no tax on Social Security in the new bill. What exactly was the impact to Social Security taxability?

SPEAKER_01:

That's a great question, Sophia. Um, the one beautiful bill did not change the taxability of Social Security benefits. Depending on your income, up to 85% of your social security benefits is taxable. The one beautiful bill did add a senior bonus deduction. So taxpayers over 65 will get an above-the-line deduction of 6,000 in order, uh, in addition to their standard deduction or itemized deduction. But just like those other deductions we've been talking about, there is a phase out. So if you're single, the phase out of this deduction begins at 75,000 of AGI and is completely eliminated at 175,000. If you're married filing joint, the phase out will begin at 150,000 and is completely eliminated at 250,000.

SPEAKER_02:

Wow. Now, no tax on tips and no tax on overtime were a couple of the big pieces of the new law. What are the tax implications here?

SPEAKER_01:

Yes, that is a term you keep hearing. No tax on tips, no tax on overtime. So for the years 2025 through 2028, taxpayers will get an above-the-line deduction for qualified tips of$25,000. So this deduction can't exceed their taxable income. And it's$25,000 per tax return, not per taxpayer. Like we said before, these deductions have phase outs. So if you're single, the phase-out will begin at$150,000 of AGI and will be completely eliminated at$400,000. And if you're married, filing joint, the phase out begins at$300,000 of AGI and completely eliminated at$550. Overtime is very similar. It will be an above-the-line deduction. So for 2025 through 2028, individuals that earn qualified overtime, which is defined as like half portion of time or you know, time and a half compensation, they will be able to take a deduction. Single takes a deduction of 12,500. Married filing joint can take in a deduction of 25,000. Similar phase out rates as the TIPS. So if I'm single, I'm going to start to phase out at 150 of modified AGI and will be completely eliminated at 275,000. Where married filing joint will begin at 300,000 of modified AGI and completely eliminated at 550,000 of AGI. So these are a lot of numbers we're throwing at you, right?

SPEAKER_02:

Oh yes. Now there was a mention of new Trump accounts in the new bill. What are these and who does it impact?

SPEAKER_01:

Yes. So these new uh Trump accounts are what we call long-term custodial accounts. They function like an IRA. So individuals can contribute up to$5,000 annually, and employers can contribute up to$2,500 annually. The interesting thing on this one is every child born in this year, 2025 through 2028, will receive a thousand dollar deposit into a Trump account. And um if you were not born in these years, but you're under 18, you can have an account open for you by family. But the um once the money is in there, they cannot the it cannot be withdrawn until the child turns 18. And then uh if it was withdrawn earlier, there could be a penalty assessed on the withdrawals. Um this, although it applies to children born in 2025, these accounts are not funded yet. Uh, they anticipate them to be funded in July of 2026. So they're hoping they could be used for a home purchase or they don't have to be specifically for retirement, but they are a way to uh grow funds during the child's lifetime.

SPEAKER_02:

Wow, that's such an amazing thing. Now, sometimes new laws are not always about what is new rather than what tax benefits are expiring or current benefits that were extended. Can you talk about some of those?

SPEAKER_01:

Sure. Um, we have some credits that are expiring. So through the end of this year, you can take these credits, uh, but starting in the beginning of 2026, they're no longer available. So those credits are the residential clean energy credit, which people take on solar systems and geothermal heat pumps, the energy efficient home improvement credit. People would take this credit for new windows and doors and insulation. Um, the new and used electric vehicle credit. Um, people who purchase an electric vehicle can have a credit in 2025 that will no longer be available in 2026. For 2025, there's no change to charitable contributions, but for 2026, there is a big change. Remember, we talked about above the line and below the line. Charitable contributions is in a below-the-line deduction. Now they're going to allow an above-the-line for individuals of$1,000 and married filing joint of$2,000. So if I take a standard deduction, I still can get a charitable deduction starting in 2026. For people who itemize, though, the itemized charitable deduction now has a floor to it. So you cannot deduct the amount of charitable deduction that is under 0.5% of your AGI. Over 0.5, you'll be able to deduct. And then in 2026, um, higher earners that are in the highest tax uh bracket, which is the 37% tax bracket, will now have a cap on all their itemized deductions. So that is a big change from 2025 to 2026.

SPEAKER_02:

Wow. So, Maggie, what final advice can you give someone who may be wondering how the new bill impacts them?

SPEAKER_01:

Yeah, my biggest advice would be call or email your tax preparer to discuss your personal situation. So there are some moves people could make before the year end. Energy efficient improvements would give you the credit. You made it before year end. Uh, some people might want to pay their real estate taxes or give charitable deductions before a year end to increase their deductions. But every single thing we talk about is dependent on your filing status and your AGI. So whether you itemize or take the standard, so our greatest advice is to please contact your tax preparer and specifically discuss any provisions that you think could apply to you.

SPEAKER_02:

Well, Maggie, I really appreciated you being on the show today. We'll catch you next time on MPCPA's Knowing What Counts.

SPEAKER_01:

Thanks. Take care.

SPEAKER_00:

Thanks for listening to the Knowing What Counts podcast. Ready to optimize your wealth and protect your future? Visit the MPgroupCPA.com or call 413 739 1800 to connect with our team of experts. Remember, success is about knowing what counts.