Trump’s Temporary Tax Breaks: 5 New Tax Provisions That Won’t Last Long

Millions of Americans will see significant shifts in their tax bills under President Donald Trump’s “big beautiful bill.” The sweeping legislation delivers several key tax breaks, including no federal income tax on some tips and overtime pay, a car loan interest deduction, a higher state and local tax (SALT) deduction and a new “bonus” deduction for qualifying seniors.

However, those provisions come with an expiration date.

“These provisions are temporary largely due to how tax legislation must be structured to comply with budget rules in Congress,” says Paul Miller, CPA and founder of accounting firm Miller and Company in New York City.

“To avoid blowing up the federal deficit, many cuts or benefits expire after a few years unless extended,” he says.

Here’s a closer look at some of the major tax breaks that are slated to disappear and how that could impact your taxes.

1. SALT deduction boosted to $40,000

Under the new law, the cap on the state and local tax (SALT) deduction jumps from $10,000 to $40,000, but only for five years.

The SALT deduction sparked intense debate during negotiations over the bill. Several key Republican lawmakers withheld their support until the cap was raised, particularly to provide relief to residents in high-tax states. In response, GOP leaders added the temporary increase to secure passage.

While a taxpayer can claim up to $40,000 in 2025, that cap adjusts annually for inflation, starting with $40,400 in 2026. Once the provision expires after 2029, unless extended by Congress the deduction will revert to the prior $10,000 cap.

The enhanced SALT deduction phases out for taxpayers with modified adjusted gross income (MAGI) of $500,000 or more in 2025. The MAGI limitation will also be adjusted for inflation through 2029.

“Once this provision sunsets, it could drop back down, meaning taxpayers in high-tax states could lose a significant deduction,” Miller says. “If you’re planning on paying off large state or local tax bills such as property taxes or state income taxes, now might be the time to do so.”

Prior to the passage of the new tax law, the SALT limit was set at $10,000 with that cap scheduled to sunset in 2025. The new measure significantly expands the deduction for now and taxpayers who itemize their deductions can take advantage of the temporary measure.

2. Tipped workers can deduct up to $25,000 from taxable income

A key campaign promise by Trump is now law — at least for the next four years: to eliminate taxes on tips. Under the new law, taxes on qualified tips will be temporarily eliminated for some workers.

Currently, tip income is taxable and workers who receive it are required to report and pay taxes on those earnings during the year. However, beginning in 2025, taxpayers can deduct up to $25,000 of tip income when they file their federal income tax return.

The new tax benefit is available whether a taxpayer itemizes or takes the standard deduction, and is in effect from 2025 through 2028.

To qualify, a taxpayer’s MAGI must not exceed $150,000 for single filers or $300,000 for married filing jointly couples.

The new bill not only extends the deduction to employees but also to independent contractors and business owners who receive tips as part of their operations. However, to qualify, their gross income (including tips) must exceed their business expenses, not including the tip deduction itself.

For example, a freelancer who earns $55,000 in 2025 — including qualifying tips — and has $20,000 in business expenses (excluding the tip deduction) would be eligible to claim the deduction, since their gross income exceeds their expenses.

3. Overtime pay eligible for new tax deduction

Workers who pick up extra shifts may now qualify for temporary relief on their overtime pay. From 2025 through 2028, single filers can deduct up to $12,500 of overtime pay, and married couples filing jointly can deduct up to $25,000.

Under the Fair Labor Standards Act of 1938, employees who work more than 40 hours per week are typically entitled to time and a half for each additional hour worked. Like regular wages, overtime pay is generally taxable. Under the new law, workers will still pay taxes on overtime pay throughout the year, but they may qualify for a deduction when filing their federal income tax return.

The deduction is available regardless of whether the taxpayer itemizes their deductions or chooses the standard deduction. In order to qualify for the deduction, the taxpayer must provide a valid Social Security number.

Both the tip income and overtime pay deductions operate in the same way: Taxpayers can reduce their taxable income as long as their MAGI is below $150,000 ($300,000 if married filing jointly). For taxpayers whose income exceeds these thresholds, the deductions will begin to phase out.

“This is a big [tax break] for working-class earners,” Miller says. “If you rely on tips or are working extra hours, now’s the time to capitalize on this break.”

He cautions taxpayers not to assume this provision will last beyond 2028. Instead, he advises using it as a tool to help build an emergency savings fund and avoid increased spending during this time period.

4. ‘Bonus’ deduction worth up to $6,000 for those age 65 or older

Taxpayers aged 65 or older can benefit from a temporary tax break of up to $6,000 from 2025 through 2028. This bonus deduction is designed to help ease the financial burden on older Americans.

To qualify, seniors must meet both the 65-or-older age rule, and income requirements:

• Single filers must have income below $75,000
• Married couples filing jointly must have income below $150,000

For a married couple filing jointly, if both spouses are 65 or older and meet the income thresholds, the deduction doubles to $12,000. This deduction can be claimed whether taxpayers itemize or take the standard deduction. This tax break expires after 2028, unless Congress extends it.

The additional deduction for qualifying seniors is another helpful, though temporary, provision, Miller says.

“For retirees on a fixed income, even a modest bump in the standard deduction can significantly reduce their taxable income,” he says. “It’s a good time for seniors to reassess how they manage withdrawals from retirement accounts, and for families to consider tax-smart strategies for elder care.”

5. Auto loan interest deduction of up to $10,000

Car owners can now claim a temporary deduction that allows up to $10,000 in interest paid on qualified auto loans to be deducted on their tax return. Before the passage of the new tax law, interest on personal auto loans wasn’t deductible.

This new provision applies to tax years 2025 through 2028. After that, the deduction will no longer be available, unless Congress extends the provision.

Taxpayers may qualify for the new deduction whether or not they itemize or take the standard deduction. But their MAGI must not exceed $100,000 for single filers or $200,000 for married couples filing jointly.

Along with income requirements, the vehicle must meet certain criteria, which include the following:

• Must be used for personal purposes (commercial vehicles won’t qualify)
• Must be classified as a car, minivan, SUV, pickup truck or motorcycle
• Must weigh less than 14,000 pounds
• Final assembly of the vehicle must be completed in the United States

Bottom line

While millions of Americans will see tax savings as early as this year, it’s important to remember that these breaks are temporary. From a bonus tax deduction for older adults to no federal tax on tips and overtime pay, and a higher SALT cap, now is the time to plan ahead. Many of these provisions are scheduled to expire in 2028, unless Congress acts. Taxpayers should take full advantage of these tax breaks before the window closes.