Stop Leaving Money on the Table at Tax Time (SB1798)

What It Covers

The episode examines seven major tax law changes for 2025 that could increase refunds, including higher standard deductions, expanded SALT limits to $40,000, new tip income and overtime deductions of $25,000 and $12,500 respectively, auto loan interest deductions up to $10,000, and additional strategies for retirement accounts, HSAs, and charitable giving optimization.

Key Questions Answered

• •Standard Deduction Increase: Single filers receive a $750 increase to $15,007.50 while married filing jointly gets $31,500 for 2025. This eliminates record-keeping needs for taxpayers below these thresholds who previously tracked charitable donations, mortgage interest, and property taxes. Tax software automatically calculates this, with seniors 65 and older receiving an additional $2,000 standard deduction plus a new $6,000 senior deduction valid for three years.
• •SALT Deduction Expansion: State and local tax deductions increase from $10,000 to $40,000 for 2025, benefiting taxpayers with high property and state taxes. The deduction phases out at modified adjusted gross income exceeding $500,000 for single filers or $250,000 married filing separately, reverting to the $10,000 cap at $600,000 income. This change corrects the 2017 tax law that inadvertently limited middle-income earners, not just wealthy taxpayers.
• •Tip Income Deduction: Service industry workers can deduct up to $25,000 in tip income, but mandatory gratuities on large parties do not qualify as they are classified as automatic service charges. The income must come from legitimate tip-based businesses with existing tip reporting systems. Online creators using platforms like Patreon should consult tax professionals about potential qualification, though reclassifying existing non-tip income as tips is not permissible.
• •HSA Triple Tax Advantage: Health savings accounts offer tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses, with a 2025 contribution limit of $8,500. After employer 401k match, HSAs represent the optimal savings vehicle because funds can be used for current healthcare or invested for retirement. Some HSA providers require minimum cash balances before allowing investments, so evaluate provider requirements before maximizing contributions to ensure investment opportunities.
• •Tax Loss Harvesting in Crypto: Cryptocurrency lacks wash sale rules, allowing investors to immediately sell losing positions and repurchase to reset cost basis while claiming losses. For example, selling Bitcoin at a $300 loss and immediately repurchasing locks in the tax deduction while maintaining the position. Traditional securities require waiting 30 days to avoid wash sale rules. This strategy works best for offsetting capital gains, with only $3,000 annual deduction against ordinary income.