No one ever willingly or knowingly overpays on their taxes. However, many taxpayers unwittingly do just that by overlooking tax deductions and leaving money on the table. Often, it's because they file taxes at the last minute, which gives them hardly any time to consider all the deductions they could avail themselves of. Another commonly observed reason for missing tax deductions is that people are not aware of certain deductions.
Another aspect that now comes into play is the One Big Beautiful Bill Act. It has reshaped the tax landscape for working Americans, freelancers, and small business owners. While some changes made headlines, others quietly opened new doors for savings.
Considering all of these factors, here are five deductions that you should take a closer look at before you file.
5 Tax Deductions You Could Be Missing Out On
1. No Tax on Tips Deduction
If you work in a job like food service, hospitality, or personal care, where the common practice is to offer tips, you may now deduct up to $25,000 of tip income from your taxable earnings. This applies to cash, card, and even certain digital tokens, as long as they're voluntary and convertible to cash. The deduction phases out for individuals earning over $150,000 and couples earning over $300,000.
2. Overtime Pay Deduction
Employees who earn overtime can now deduct the “extra” portion they receive above their normal pay rate for working overtime. The maximum deduction that can be claimed is $12,500 for individuals and $25,000 for joint filers. It's available to both itemizers and non-itemizers, making it more accessible than previous credits.
3. Expanded SALT Deduction
The cap on state and local tax (SALT) deductions has jumped from $10,000 to $40,000 for 2025. This is especially helpful for taxpayers in high-tax states or those with large property tax bills. If you itemize, this increased deduction could significantly reduce your taxable income.
4. Senior Deduction for Roth Conversions
Americans over 65 now qualify for a new deduction of up to $6,000 for individuals and $12,000 for couples. These deductions can be claimed when converting traditional retirement accounts to Roth IRAs. This helps offset the upfront tax hit and makes conversions more viable during retirement planning. The deduction phases out at $75,000 for individuals and $150,000 for couples.
5. Immediate Expensing for Equipment and Facilities
Small businesses and manufacturers can now deduct the full cost of qualifying equipment and new facilities in the year they're placed in service. This includes machinery, servers, and production space. The change improves cash flow and shortens payback periods, especially for companies investing in growth.
Finlotax: Take Control Of Your Finances With Our All in One Tax & Wealth Checkup.
At FinloTax, we help you smoothly navigate the tax labyrinth and save money in the bargain. With new deductions now in play, a review of your finances could mean thousands back in your pocket. Our team stays current so you don't miss a thing, whether it's tips, overtime, Roth conversions, or any of the other IRS deductions. That's why we've also created an All-in-One Tax & Wealth Checkup that helps you spot new deductions and apply them correctly.
Book your checkup today by getting in touch at 4088229406 and make this year's return work harder for you.