Latino Workers, Parents and Homeowners: Here’s What the New Tax Law Means for You
Let’s start with two new tax deductions: The deductions for no tax on tips and overtime. Beginning in tax year 2025 through tax year 2028
Restaurant in California. Crédito: Damian Dovarganes | AP
The “One Big Beautiful Bill” recently passed and you might be wondering what that means for you and your family. If you’re a tipped worker, an employee doing overtime, a parent raising children, or a homeowner paying high property taxes, this legislation could bring significant tax changes that could have impacts on your taxes and wallet. We’ll lay out some of the key changes under the new tax bill to help you navigate these new changes.
Let’s start with two new tax deductions: The deductions for no tax on tips and overtime. Beginning in tax year 2025 through tax year 2028, qualified workers earning tips like servers, baristas and salon professionals, may be able to deduct up to $25,000 of that tip income. The deduction is phased out at income over $150,000 ($300,000 married filing jointly). Similarly, those clocking in overtime including retail associates, nurses, police officers, and firefighters, may be able to deduct up to $12,500 ($25,000 on a married filing joint return) in qualified overtime income. The deduction is phased out with income over $150,000 ($300,000 married filing jointly).
These tax provisions don’t mean that a certain portion of tips or overtime are excluded from income, but the new provisions are deductions claimed at tax time so they reduce your taxable income, which lowers your overall tax bill. Your tax savings is then based on your tax bracket and tax rate. For example, a nurse in the 22% tax bracket making $12,500 in overtime could have a potential tax savings of $2,750 at tax time.
In order to claim both of these provisions you will need a valid social security number. ITINs are not valid for these tax provisions.
The bill also may bring some relief to homeowners and may help Latino families tax outcomes in high-tax states like New York, California, and New Jersey. A deduction known as SALT or State and Local Tax, has an increase on the cap. Now the cap on the deduction jumps from $10,000 to $40,000 starting in 2025. That means if you’ve been paying thousands in property and state income taxes over the previous $10,000 cap that you weren’t able to deduct, you may now be able to deduct more of those expenses, keeping more of your money in your pocket.
For parents, the expansion of the Child Tax Credit increases the credit from $2,000 to $2,200 per child under 17 effective in tax year 2025. That’s real money to help with childcare, school supplies, or even just groceries. To claim it, you’ll need a valid Social Security number for you and your child. ITINs are no longer valid to claim the Child Tax Credit under the new tax bill. And for our elders: Seniors 65 and older will get a new deduction of up to $6,000. This could mean extra breathing room for a parent or abuela, come tax season. There is an income requirement in order to get the credit. The deduction phases out with income over $75,000 single and $150,000 married filing jointly. To claim this deduction you’ll need a valid Social Security number.
Now, here’s the catch, some previous tax provisions are being eliminated: Energy-efficient home improvements tax credits like for energy efficient windows or doors are being eliminated after 2025 and the Clean Vehicle Credit is being eliminated after September 30, 2025. If you are considering any energy efficient home improvements or clean vehicle purchases pay attention to these dates so you don’t miss out on purchasing by the deadline to be eligible for the credits. And if you work from home but are not self-employed, the option to deduct unreimbursed expenses, like your home office setup, won’t be returning.
Still, the bottom line is whether you’re a small business owner, a working parent, or someone juggling multiple jobs, the “One Big Beautiful Bill” likely impacts you in more ways than you think.
During a time where every dollar counts and many of us wear multiple hats to support our households, staying informed isn’t just smart, it’s empowering. So don’t wait until tax season surprises you. Learn about the changes now, and make a plan to take full advantage of the credits and deductions you’re eligible for. You’ve earned it.
(*) Nadia Rodriguez, TurboTax Spokesperson and CPA.
The texts published in this section are the authors’ sole responsibility, and La Opinión assumes no responsibility for them.
