New federal tax rules set to take effect in the 2025 tax year could provide significant deductions for seniors and certain vehicle buyers, experts say. The changes, announced by lawmakers and highlighted by Andrew Zumwalt, director of the University of Missouri’s Personal Financial Planning program, aim to reduce taxable income for eligible Americans.
Senior Tax Deduction Expands
Taxpayers aged 65 or older by the end of the year can claim a deduction of up to $6,000 for single filers and $12,000 for married couples filing jointly, provided both spouses meet the age requirement. This deduction is in addition to the standard deduction and applies through the 2028 tax year.
“While this tax benefit is often referred to as ‘no tax on Social Security,’ it is not connected to Social Security payments themselves,” Zumwalt explained. The deduction begins to phase out for single filers with modified adjusted gross incomes above $75,000 and married couples filing jointly above $150,000. He noted that the change will not affect state income taxes in Missouri.
New Vehicle Loan Interest Deduction
The law also introduces a deduction for interest paid on loans for qualifying new vehicles purchased after December 31, 2024, for personal use. Taxpayers can deduct up to $10,000 in interest per year. Eligible vehicles include cars, minivans, SUVs, pickup trucks, and motorcycles weighing less than 14,000 pounds, with final assembly in the United States. Lenders must provide interest statements to support the deduction.
The deduction phases out for single filers earning more than $100,000 and married couples filing jointly with incomes over $200,000. Like the senior deduction, this benefit does not affect Missouri state taxes and is claimed “below the line” on federal returns.
Guidance for Taxpayers
Zumwalt emphasized the importance of maintaining proper documentation, including tax returns and lender statements, to support these deductions. He discussed these updates and other changes to federal income tax law during a recent Volunteer Income Tax Assistance (VITA) training, where IRS-certified volunteers assist taxpayers at no cost.
“These changes aim to simplify tax benefits while keeping them distinct from state tax calculations,” Zumwalt said.
