Tax Season Takeaways

Matt Persichetti, CPA

Director of Tax & Accounting

We have officially wrapped up our first tax season through Aerie Tax and Advisory (ATA) and it was a successful one. While getting to work with a lot of great people, I was able to learn more about what makes them curious about the world of tax. A lot of questions stemmed from the legislation changes from the One Big Beautiful Bill Act (OBBBA) signed into law on July 4th, 2025.

Included were major updates to the tax code including no tax on overtime, no tax on tips, enhanced senior deduction - more commonly known as no tax on Social Security, and the additional deduction for car loan interest payments. The OBBBA also made many of the Tax Cuts and Jobs Act (TCJA) updates to the tax regulations permanent. The biggest and most common impact across clients’ returns from this was the increased standard deduction. We’ll dive into detail deeper about these topics and the impact they had on clients this past tax season.

No Tax on Tips and Overtime

No Tax on Tips and Overtime was a big influence from the OBBBA on returns this year. Until

2028, eligible workers can deduct up to $25,000 worth of tips from their federal income, with

single filers with modified adjusted gross income (MAGI) less than $150,000 ($300,000 for mar ried filing jointly) seeing the full benefit.

Also ending in 2028, single filers can deduct up to $12,500 ($25,000 for married filing jointly) of qualified overtime pay. The same MAGI thresholds apply for taxpayers to see the full benefit. These deduction amounts are phased out if your MAGI exceed these thresholds. The deduction for interest payments on car loans applies only to vehicles when final assembly took place within the US. Taxpayers are allowed to deduct up to $10,000 worth of interest paid on loans originating after December 31st, 2024.

Enhanced Senior Deduction

The biggest change that affected our client’s returns this past return filing season was the en-

hanced senior deduction or “no tax on Social Security”. While Social Security benefits technically are still taxable in the same 0%, 50%, 85% brackets that they have been historically, the enhanced senior deduction in effect wipes away the tax calculated on the benefits received. The deduction is an extra $6,000 (per person) for individuals with MAGI of $75,000 or less filing single ($150,000 married filing jointly). Households where both spouses were 65 and older received an additional $1,600 each ($2,000 total for single filers meeting the 65 years of age requirement).

Increased Standard Deduction

Prior to 2017’s TCJA, standard deduction amounts for single filers was $6,350 and $12,700 for married couples filing jointly. Once passed, the TCJA just about doubled these amounts to $12,000 and $24,000 for single and married filing jointly respectively. In the 2025 tax year the standard deduction has increased to $15,750 and $31,500 respectively.

One of the biggest developments that helped a lot of taxpayers this past filing season was the increased standard deductions (along with the new deductions listed on schedule 1-A). A household with a couple that filed their return married filing jointly in 2025 and both age 65 and older received a standard deduction of $46,700 as opposed to filing their 2017 return with a standard deduction of only $12,700. There’s a $34,000 difference!