New IRS Guidance on the Car Loan Interest Deduction

The IRS has issued new guidance on a major tax benefit created under the One, Big, Beautiful Bill: a deduction for interest paid on qualifying car loans. This deduction applies to loans taken out after December 31, 2024, to purchase new, made-in-America vehicles for personal use. It’s available to taxpayers whether they take the standard deduction or itemize, making it broadly accessible.

Who Qualifies for the Deduction

The proposed regulations clarify several key requirements. First, the vehicle must be newly purchased and assembled in the United States. The guidance explains how to determine whether a vehicle meets the “final assembly in the U.S.” requirement. It also outlines how to identify which loans qualify and how to calculate the amount of deductible interest. The deduction is capped at $10,000 per year, and the rules specify which taxpayers are eligible to claim it.

What Lenders Need to Know

Lenders also have new responsibilities. Beginning in 2025, certain lenders and other interest recipients must file information returns with the IRS reporting the interest they received and other loan details. These filings help taxpayers substantiate their deduction. The proposed regulations explain who must report, what information must be included, and how and when the reporting must occur.

Why This Matters

For taxpayers planning to purchase a new vehicle, this deduction could provide meaningful savings over the life of a loan. For lenders, understanding the reporting requirements will be essential to supporting customers who want to claim the benefit. The IRS is accepting public comments on the proposed regulations through February 2, 2026.

Tax-Free Tips & Overtime: What Workers Need to Know

The One, Big, Beautiful Bill Act introduces major changes for workers who earn tips or overtime, offering meaningful tax relief from 2025 through 2028. These updates are designed to simplify reporting, reduce tax burdens, and ensure workers keep more of what they earn.

No Tax on Tips

Under the new law, tips received by workers are no longer subject to federal income tax. This applies to all qualified tips reported to employers or reported directly by the worker. While tips remain reportable for wage and information-return purposes, the income itself is not taxed at the federal level. This change provides immediate financial benefit to workers in service industries who rely heavily on tipped income.

No Tax on Overtime

The Act also creates a new deduction for qualified overtime pay. Workers may deduct the portion of overtime that exceeds their regular rate—essentially the “extra half” in time-and-a-half. This deduction is available whether or not the taxpayer itemizes. The maximum annual deduction is $12,500 for single filers and $25,000 for joint filers, with phaseouts beginning at modified AGI of $150,000 ($300,000 for joint filers).

To qualify, overtime must be reported on a Form W-2, Form 1099, another official statement, or reported directly by the individual. Employers are required to report qualified overtime compensation on IRS or SSA information returns, and transition relief will be available for the 2025 tax year.

Why This Matters

For millions of workers, these changes mean more take-home pay and less tax complexity. Service workers, hourly employees, and anyone who regularly works overtime can expect meaningful savings. With proper reporting and documentation, taxpayers can take full advantage of these new benefits throughout the 2025–2028 period.

Upcoming IRS Changes to Refunds & Tax Payments

The IRS has released new guidance regarding Executive Order 14247, which focuses on modernizing how payments are sent to and from the federal government. These changes are designed to reduce fraud, improve security, lower processing costs, and make transactions—such as tax refunds and tax payments—faster and more reliable.

What’s Changing Beginning with the 2026 filing season, the federal government will transition most payments to electronic methods. This includes:

  • Refunds, benefits, grants, and other payments issued by the government

  • Payments made to the government, such as tax balances due, fees, and penalties

Paper checks and money orders will still be accepted for now, and this does not change how you file your tax return. Only the payment and refund methods are being modernized.

What You Should Do Now To prepare for these upcoming changes, the IRS recommends:

  • Using direct deposit for your tax refund

  • Choosing electronic payment options when paying taxes (e.g., IRS Direct Pay or EFTPS)

  • Ensuring your bank account or prepaid debit card information is accurate and up to date

  • Reviewing IRS resources if you do not currently have a bank account

Limited exceptions will be available for hardship or specific legal circumstances.

Is that the IRS contacting you – or is it a scam?

Some of the most common tax scams are phone calls and emails from thieves pretending to be from the IRS. Here are several tips to help you avoid being scammed.
IRS employees will not:

  • Call demanding an immediate payment.
  • Call you without first sending a bill in the mail.
  • Demand you pay your taxes in a specific way.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to have you arrested.
  • Threaten legal action.
If you receive an inquiry like this, report the incident using:
  • The “IRS Impersonation Scam Reporting” page.
  • The “FTC Complaint Assistant” and include "IRS Telephone Scam" in the comments.