By Christian Hudspeth CFP®
With tax season in full swing, here are four tax-saving and wealth-building opportunities that we hope you don’t miss out on as the new OBBBA tax law takes effect.
New $40,000 tax deduction for homeowners
Own a home or a second home? You may deduct up to $40,000 in state and local taxes (SALT) if you paid property tax, state income tax, or sales taxes from your taxable income in tax year 2025, up from the $10,000 limit in previous years. You can also now deduct today’s sky-high mortgage insurance premiums along with your mortgage interest if you itemize.
Opportunity: We’re helping clients use the expanded SALT deduction to save tens of thousands in taxes by bundling property tax payments, mortgage interest, and charitable donations strategically during high-income years.
New $12,000 “senior deduction”
Are you (or someone you know) age 65 or older? Seniors can get a $6,000 tax deduction (or $12,000 for married senior filers) if their income was $150,000 or less, even if they don’t itemize. That could mean a tax savings of up to $2,640 this year at a 22% tax rate.
Opportunity: It’s wonderful seeing retirees pay just 8% in taxes on IRA withdrawals up to $140,000 per year thanks in part to this new deduction (Read: “How to Pay Little to No Taxes in Retirement”).
New $1,000 in “free” money for your child’s future
New this year are “Trump accounts” – custodial investment accounts available for anyone under 18. To get started, parents receive a $1,000 initial government contribution for every child born between 2025 and 2028.
Opportunity: Whether it’s a Trump account or a taxable brokerage / UGMA account for minors, custodial investment accounts can be a great way to teach kids or grandkids about the power of investing. Compared to 529 plans, these accounts offer more investment options (such as market index-tracking funds) and the ability for the child to later use it to start a business, go to college, or even buy a first home when they become adults.
Just think: If you made a $5,000 initial investment at your loved one’s birth, it could grow to $27,800 by age 18 at a 10% annual return, giving them a valuable start toward future education or their first home. What a memorable gift to leave behind for your loved ones!
New $10,000 tax deduction for car loan interest
Did you buy a brand-new car, or do you plan to soon? The new tax law allows you to deduct up to $10,000 in car loan interest paid on a new personal vehicle “assembled in the United States.” With new car prices averaging $50,000 and loan rates averaging 6.5%, this deduction could appeal to many buyers.
Opportunity: Many think this applies to new US-brand cars only, but this is NOT true. Brands from Acura and BMW to Toyota and Volvo all have cars built in the United States that qualify (See Car Loan Interest Tax Deduction: Full List of Qualifying Vehicles).
And this tax deduction is available to taxpayers with incomes up to $250,000, even if they don’t itemize.
Seeing around the financial corner
With every new tax law change comes the opportunity to build wealth for you and your loved ones. If you’re ready to take advantage of these opportunities, we invite you to work with us as we help you see around the financial corners of life.
Ready to get started? Reach out to the author (and CERTIFIED FINANCIAL PLANNER™) at chudspeth@fmpwa.com.
Next: Should I Do My Own Taxes or Hire an Expert?
*The information presented here is not specific to any individual’s personal circumstances. FMP Wealth Advisers is not providing investment, tax, legal, or retirement advice or recommendations in this article.
**To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
***These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
