Don’t miss the tax deductions boat!
Although it’s still a freezy winter month, April and tax time are on the horizon again, and there are great deductions for homeowners. So browse the possibilities, and contact your tax professional to ask if and when these tax deductions might apply to you. And consider using your tax refund for a cruise to warmer climates!
The Old Standards for Tax Deductions
Mortgage interest is almost always deductible. If you have more than one mortgage, you can still deduct the interest on all of them, as long as they don’t exceed $1 million in total mortgage amount, and the purpose of the mortgage is to buy, build, or improve your home. (That second mortgage to finance your 10th wedding anniversary bash does NOT count!)
New Homeowners
Just purchased a home? These deductions may not be on your radar. Did you know that if you just bought your home, you may be able to get a deduction for the points you paid to buy down your rate? If you bought a home, you can deduct the points for the year you refinanced. (Did the seller pay the points? Check with your tax pro, you may still qualify to deduct them!)
If you moved more than 50 miles when you bought your new home, some of your moving expenses may also be deducted.
Refinancing
You can’t deduct your points all at once, as it’s written off over the course of the loan, but you can deduct 1/20th of the points you paid on a 20-year loan each year over the life of the loan. Every little bit helps, and this one keeps helping for years.
Selling Your Home
Every two years, single homeowners can have a tax-exempt profit of up to $250,000, as long as they lived in the home as a primary residence during two of the last five years.
Married homeowners aren’t left out—they can have up to $500,000 of tax-exempt profit on the sale of their primary residence.
Home Improvements
Keep your receipts, invoices, and records. Although the expenses can’t be deducted directly, they can help you prove your home’s worth and value when it comes time to sell. That can help you both with the selling price, and proving what was profit and what was value when it comes time to pay capital gains taxes after the sale of your home someday.
Medical-Related Improvements
As long as the improvements are to accommodate a medical need and don’t add to the value of your home, you can deduct them. Ramps, bathroom fixtures, changes in counter heights, and air filters are all deductible, but consult your favorite tax pro about items like pools, additions, and air conditioning.
Vacation Homes
Your state and local property taxes, points, and mortgage interest may also be deductible for your second home. In 2025, the SALT (State & Local Taxes) deduction cap temporarily increases to $40,000, though income-based reductions may apply.
Working From Home
An office in your home that is used strictly for business can be beneficial to your tax bottom-line. (The family room that doubles as an office does NOT qualify for deductions!)
For a dedicated office, any costs for maintaining the office, such as paint, carpet, and a proportion of your utilities, can be deductible.
Key 2025 Tax Deductions
Standard Deduction – The higher standard deduction is now permanent. 2025 amounts:
- $31,500 – Married filing jointly & surviving spouse
- $23,625 – Head of household
- $15,750 – Single or married filing separately
Senior Deduction – A new deduction for taxpayers 65+ (temporary for 2025–2028):
- $6,000 per qualified individual
- Can be taken with or without itemizing
- Phaseout applies for MAGI (Modified Adjusted Gross Income) above $75,000 single/HOH or $150,000 MFJ
Child and Dependent Credits
- Child Tax Credit: $2,200 per child, refundable portion up to $1,700
- Other Dependent Credit: $500
- Child and Dependent Care Credit: credit starts at 50% for AGI $15,000 or less, 20% for AGI over $103,000 ($206,000 MFJ)
- Expense limits remain $3,000 ($6,000 for two or more qualifying dependents)
Adoption Credit
- Refundable up to $5,000
Qualified Tips and Overtime Deduction
- Tips: up to $25,000 per eligible taxpayer
- Overtime: up to $12,500 (single/HOH) or $25,000 (MFJ)
- Available for both itemizers and non-itemizers
- Phaseouts apply based on MAGI
Car Loan Interest Deduction
- Up to $10,000 for qualified passenger vehicle loans
- Loan must originate after Dec 31, 2024
- Vehicle must be new, for personal use, and assembled in the U.S.
- Phaseout: $200 reduction per $1,000 of MAGI over $100,000 single/HOH or $200,000 MFJ
100% Bonus Depreciation
- Permanent for qualified property acquired and placed in service after Jan 19, 2025
Section 179 Deduction
- Deduction limit: $2.5 million
- Investment limit: $4 million
- Adjusted annually for inflation
Energy and Clean Vehicle Credits
- Energy-efficient home improvement credit – No longer available for any property placed in service after December 31, 2025.
- Residential clean energy credit – Any expenditures made after December 31, 2025, are no longer eligible.
- New clean vehicle credit – Only available for vehicles acquired before September 30, 2025.
- Previously-owned clean vehicle credit – Also ends for vehicles acquired after September 30, 2025.
- Qualified commercial clean vehicle credit – Not allowed for vehicles acquired after September 30, 2025.
- Alternative fuel vehicle refueling property credit – Can only be claimed for property placed in service by June 30, 2026.
- New energy-efficient home credit – No longer available for any qualified home acquired after June 30, 2026.
- Energy-efficient commercial buildings deduction – Not allowed for any property that began construction after June 30, 2026.
Timing matters, so check with your tax professional to see which credits you still qualify for. These changes affect both itemizers and non-itemizers looking to maximize tax deductions.
IRS Paper Checks
The IRS is phasing out paper checks beginning September 30, 2025. Direct deposit or electronic payments are now strongly recommended.
Smooth Sailing for 2025 Tax Deductions
Review these tax deductions with your tax professional and make sure you maximize your 2025 benefits. Every deduction helps, and you might have extra for home improvements, family fun, or maybe that getaway you’ve been dreaming of.
A Big Thank You
A big thank you for the “tax facts” to:
Chuck Lehman, CPA
Lehman Bookkeeping Solutions, Inc
PO Box 328
Milford Center, OH 43045
937-935-3231
