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Money Nobody Knew
Every year the tax code hands out money that most eligible people never ask for — not because the amounts are small, but because nobody announced them. This page is the announcement: the four deductions the 2025 law created, the business credits that sit unclaimed in plain sight, and two doors that have already closed, labelled as closed. Every figure is traced to an IRS source, and every expiration date is printed next to the money.
Education only — not personal tax advice. Personal questions route to a credentialed pro.
Figures verified against IRS sources · Tax-year tables 2016–2026 · Re-verified each season by the Update Engine · Last review: November 7, 2026
The four new deductions from the 2025 law
One law — the One Big Beautiful Bill Act (P.L. 119-21) — created four deductions that did not exist before 2025, all claimed on the new Schedule 1-A (Form 1040), all available whether or not you itemize, and all scheduled to expire after 2028. Claim them while they exist.
Tips deduction — up to $25,000
The 2025 law (IRC §224) lets employees and self-employed workers deduct up to $25,000 a year of qualified tips — one cap per return, shared by both spouses on a joint return. The gates are exact: your occupation must be on the IRS's published list of occupations that customarily and regularly received tips on or before December 31, 2024 (the Treasury Tipped Occupation Codes — more than 70 occupations); the tips must be voluntary — cash or charged, including tip pools — because mandatory service charges never count; and they must be reported on a Form W-2, a Form 1099, or by you on Form 4137. Tips earned in a specified service trade or business (health, law, accounting, consulting, financial services, and their kin) do not qualify at all, and a self-employed worker's deduction cannot exceed the net income of the business that earned the tips. The maximum shrinks by $100 for every $1,000 of modified AGI over $150,000 ($300,000 filing jointly) and is gone at $400,000 / $550,000. Two honest limits on the slogan: this is an income-tax deduction claimed at filing time — your tips still owe Social Security and Medicare tax all year — and if you are married, you must file jointly to claim it.
Claim it: Schedule 1-A (Form 1040), Part II — available whether or not you itemize
Authority: IRC §224; IRS Fact Sheet FS-2025-03; IRS Tax Tip 2026-06
Overtime deduction — only the “half” counts
The companion deduction (IRC §225) covers up to $12,500 a year of qualified overtime compensation — $25,000 on a joint return. Read the definition before you estimate: only the premium the Fair Labor Standards Act requires counts — the extra “half” of time-and-a-half for hours over 40 in a workweek. If your regular rate is $24 and overtime pays $36, the deductible piece is $12 an hour, not $36. The straight-time portion never counts, and neither does anything richer than the FLSA floor — the extra half of double time, daily overtime a state requires but federal law does not, and contract premiums above the federal requirement are all outside it. The amount must be reported on a Form W-2, Form 1099, or other statement furnished to you (for 2025, see the transition note below), and the same phase-out applies: $100 less for every $1,000 of modified AGI over $150,000 ($300,000 joint). Married workers must file jointly, and like the tips deduction it reduces income tax only — overtime pay still owes payroll tax in full.
Claim it: Schedule 1-A (Form 1040), Part III — available whether or not you itemize
Authority: IRC §225; IRS Fact Sheet FS-2025-03; IRS Tax Tip 2026-06
The $6,000 senior deduction
The simplest of the four: if you are 65 or older by the last day of the tax year, you may deduct an additional $6,000 — $12,000 on a joint return when both spouses qualify. It stacks on top of the standard deduction, including the long-standing extra standard-deduction amount for age 65, and it is equally available if you itemize — nobody has to choose a lane to get it. The phase-out is a slope, not a cliff: the deduction shrinks by 6% of your modified AGI over $75,000 ($150,000 filing jointly) — $60 per $1,000 over — and because each spouse's $6,000 phases separately, a couple where both qualify loses ground twice as fast. Worked example from the rule: a single filer at $85,000 of modified AGI is $10,000 over the line, loses $600, and keeps $5,400. The deduction reaches zero at $175,000 ($250,000 joint). Married filing separately cannot claim it, and a Social Security number is required. The age-65 standard-deduction add-on underneath it is permanent; this $6,000 layer is the part that expires after 2028.
Claim it: Schedule 1-A (Form 1040) — itemizers and standard-deduction takers alike
Authority: P.L. 119-21 §70103 (IRC §151(d)(5)); IRS Fact Sheet FS-2025-03
Car-loan interest — up to $10,000
The fourth Schedule 1-A deduction: up to $10,000 a year of interest on a loan for a new vehicle bought for personal use, final assembly in the United States, the loan originated after December 31, 2024 and secured by the vehicle — with the VIN on the return and a phase-out above $100,000 of modified AGI ($200,000 joint). Its full verified treatment — the gates, the phase-out arithmetic, the refinance rule, and the bright line between this personal deduction and the business-vehicle rules — lives in the Business Vehicle Center, where it belongs: the same car cannot be both.
Full treatment: Business Vehicle Center — the personal car-loan interest deduction
Authority: IRC §163(h)(4); IRS Fact Sheet FS-2025-05; Publication 6126 — claimed on Schedule 1-A, Part IV
📌 Reporting transition: why your 2025 W-2 may not show these amounts
Why 2025 is a do-it-yourself year: the law asked employers to state tips and overtime premium separately on W-2s and 1099s, but the IRS made 2025 a transition year — Notice 2025-62 waives the penalties for not reporting those amounts separately for 2025, and Notice 2025-69 shows workers how to figure their own 2025 deductions from pay stubs and records. From 2026 the forms carry the numbers (tips in W-2 box 12, code TP, with your occupation code in box 14b; overtime premium in box 12, code TT). Keep your final 2025 pay records — they are the documentation behind this year's Schedule 1-A.
Business credits nobody claims
Credits, not deductions: each dollar of credit is a dollar off the tax itself. Most flow through the general business credit (Form 3800), and most carry forward when a thin year cannot absorb them.
§45B — the employer's FICA tip credit
Your staff's new tips deduction did not touch your side of the ledger: employers still pay the 7.65% employer share of Social Security and Medicare tax on tips — and §45B hands that cost back as a credit on the tips your workers report. For food and beverage employers, the credit covers the employer FICA paid on tips above the amount that brings wages to $5.15 an hour (the federal minimum wage as frozen on January 1, 2007 — the statute never updated the number). The 2025 law's quiet expansion: for tax years beginning after December 31, 2024, beauty services joined the credit permanently — barbering and hair care, nail care, esthetics, and body and spa treatments where tipping is customary (their wage threshold is the current $7.25 federal minimum). Salons and spas have paid this tax for decades with no credit; from 2025, they can claim it like restaurants always could.
Claim it: Form 8846, then the general business credit on Form 3800
Authority: IRC §45B as amended by P.L. 119-21; Instructions for Form 8846
§45E — retirement-plan startup credit (up to $5,000 a year)
Start a SEP, SIMPLE IRA, or 401(k) and the IRS pays part of the setup bill: a credit for the plan's first three years of up to $5,000 a year toward setup and administration costs. Employers with 50 or fewer employees get 100% of those costs credited; 51 to 100 employees get 50%. The annual cap is the greater of $500 or $250 per eligible non-highly-compensated employee, up to the $5,000 ceiling. You qualify with 100 or fewer employees who earned at least $5,000 in the prior year, if you did not maintain a plan covering the same employees in the three years before. The same form carries two stackable SECURE 2.0 companions most owners never hear of: a credit for the employer's own contributions (up to $1,000 per employee in the plan's first five years) and a flat $500-a-year credit, for three years, for adding automatic enrollment (§45T).
Claim it: Form 8881 (all three credits), then Form 3800
Authority: IRC §§45E, 45T; IRS, Retirement Plans Startup Costs Tax Credit; Instructions for Form 8881
§44 + §190 — the accessibility pair
Two breaks pay a business to open its doors wider, and they are built to stack. The §44 Disabled Access Credit returns 50% of eligible access spending between $250 and $10,250 — a maximum credit of $5,000 a year — to an eligible small business (prior-year gross receipts of $1 million or less, or 30 or fewer full-time employees). It covers spending to comply with the ADA: removing barriers, providing interpreters or readers, modifying equipment. Read the fine print once: the physical barrier-removal category counts only for facilities first placed in service on or before November 5, 1990, while the equipment and communication categories carry no such age limit. Its partner, the §190 deduction, has no size test and no age limit: any business may deduct up to $15,000 a year of the cost of removing architectural and transportation barriers at an existing facility, instead of depreciating it over decades. The same dollars cannot earn both — claim the credit first, then deduct what is left.
Claim it: Form 8826 for the §44 credit; the §190 deduction on the business return itself
Authority: IRC §§44, 190; IRS, Tax Benefits for Businesses With Employees Who Have Disabilities; Form 8826
§41 — the research credit as payroll cash for young companies
A pre-profit company has no income tax for the research credit to reduce — so since the PATH Act, a qualified small business may instead elect to fire the credit at the tax it definitely owes: payroll tax. Qualified means young and small: gross receipts under $5 million in the credit year, and no gross receipts at all in any year before the five-taxable-year period ending with the credit year. The election, made on Form 6765 attached to a timely filed original return (never an amended one), applies up to $500,000 a year of research credit against employer payroll taxes — the first $250,000 against the employer share of Social Security tax, the next $250,000 against the employer share of Medicare tax — claimed quarter by quarter on Form 8974 with the Form 941, starting with the first quarter that begins after the income tax return is filed. The election is available for at most five tax years. Payroll providers know this form; what surprises owners is that the door exists at all.
Claim it: Election on Form 6765 (timely original return); claimed on Form 8974 with Form 941
Authority: IRC §§41(h), 3111(f); IRS, Qualified Small Business Payroll Tax Credit for Increasing Research Activities
§45S — paid family & medical leave credit, now permanent
Employers who pay employees on family and medical leave claim a credit of 12.5% to 25% of the leave wages — the richer your wage replacement, the higher the rate (50% replacement earns the 12.5% floor) — for up to 12 weeks per employee per year. The price of admission is a written policy offering at least two weeks of paid family and medical leave, and the credit reaches only qualifying employees: generally a year of service (employers may elect six months under the new law) and prior-year pay at or below 60% of the highly compensated threshold — $96,000 for 2026. The status is the news: written as a pilot that kept expiring, the credit was made permanent by the 2025 law for tax years beginning after 2025, and from 2026 an employer may instead figure the credit on the premiums it pays for a paid-leave insurance policy. A benefit you can finally build a handbook around.
Claim it: Form 8994, then Form 3800
Authority: IRC §45S as amended by P.L. 119-21 §70304; Instructions for Form 8994
§45F — the employer childcare credit, quadrupled
Help your employees with childcare and, from 2026, the credit finally matches the gesture. Through 2025 it paid 25% of qualified childcare facility expenditures plus 10% of resource-and-referral spending, capped at $150,000. For amounts paid or incurred after December 31, 2025, the 2025 law permanently raises it to 40% of facility expenditures (plus the 10% referral piece) with a $500,000 cap — and for an eligible small business, one meeting the §448(c) gross-receipts test (about $32 million average for 2026), 50% with a $600,000 cap. Both caps are inflation-indexed from 2027, and arrangements run jointly with other employers or through an intermediary now expressly qualify. Building or funding a facility, buying slots at a licensed provider, or contracting for referral services all sit inside the definition — read it before assuming your arrangement is too small or too informal to count.
Claim it: Form 8882, then Form 3800
Authority: IRC §45F as amended by P.L. 119-21 §70401; Instructions for Form 8882
§1202 — the small-business stock exclusion (up to $15 million)
Not a credit and not a deduction — an exclusion: sell qualified small business stock and part or all of the gain simply never becomes income. For stock issued after July 4, 2025, the 2025 law softened the famous five-year cliff into stairs: hold at least 3 years and exclude 50% of the gain, at least 4 years for 75%, at least 5 years for 100%. The per-issuer cap rose to the greater of $15 million or 10 times your basis, and the corporation's gross assets may reach $75 million (measured at all times before, and immediately after, your stock was issued); both figures are inflation-indexed for tax years after 2026. Stock issued on or before July 4, 2025 keeps the old rules — $10 million cap, $50 million ceiling, 100% only after five years (for stock acquired after September 27, 2010). The gates are strict and they are tested at issuance: original-issuance stock in a domestic C corporation, held by a noncorporate shareholder, in an active qualified business — many service fields are excluded. This is a plan-at-incorporation benefit; by the exit, it is too late to qualify, which is exactly why it sits on a page about money nobody knew.
Claim it: Figured on Schedule D under the qualified small business stock rules (Form 8949 reporting)
Authority: IRC §1202 as amended by P.L. 119-21; Schedule D instructions
§1244 — when the small-business stock dies, an ordinary loss
The companion to §1202 that nobody prints: §1202 rewards the stock that wins; §1244 cushions the stock that dies. If qualifying small-business stock is sold at a loss or becomes worthless, the loss is treated as an ORDINARY loss — deductible against wages and other ordinary income, free of the $3,000-a-year capital-loss drip — up to $50,000 per year, or $100,000 on a joint return; any excess stays a capital loss under the usual rules. The gates mirror §1202's discipline and are tested at issuance: the stock must have been issued to you — an individual, or a partnership — by the corporation itself, in exchange for money or property other than stock or securities; the corporation must be domestic and small, meaning the aggregate money and property it had received for its stock, as contributions to capital and as paid-in surplus could not exceed $1,000,000 when your stock was issued; and during the five most recent tax years before the loss, more than half of its gross receipts must have come from active business operations rather than rents, royalties, dividends, interest, and annuities. Buy the shares secondhand — from a founder, a fund, anyone — and the door is closed: original issuance is the whole point. Founders should hear the planning line while it is still true: the $1,000,000 test is measured when the stock is issued, so the capitalization table you build in year one decides this deduction in year nine.
Claim it: Form 4797 (the ordinary portion); Schedule D (any excess, as a capital loss)
Authority: IRC §1244; Treas. Reg. §1.1244(b)-1 (the $50,000 / $100,000 annual limits)
§127 — your employer can pay $5,250 of your education or student loans, tax-free
Under a written §127 educational assistance plan, an employer can provide up to $5,250 per employee per year of educational assistance — tuition, fees, books, supplies and equipment — and none of it is wages: excluded from the employee's income and from payroll taxes, deductible to the employer. Since the CARES Act, the same $5,250 could also pay principal and interest on the employee's qualified student loans — but that piece was a temporary guest, scheduled to leave after December 31, 2025. The 2025 law changed the ending: P.L. 119-21 made student-loan repayment under §127 PERMANENT, and the $5,250 cap itself begins inflation indexing for tax years after 2026; the IRS's updated FAQs (FS-2026-10) and sample plan document (Publication 5993) now say so. The mechanics people miss: it is ONE $5,250 cap for tuition help and loan payments combined, not one of each; the plan must be written and may not discriminate in favor of highly compensated employees; and assistance above the cap is simply taxable wages, not a violation. If your employer offers tuition help but has never switched on loan help, the ask costs them nothing they are not already spending — and if you ARE the employer, this is the cheapest raise in the code.
Claim it: Excluded on the W-2 under the employer's written §127 plan — nothing for the employee to file
Authority: IRC §127 as amended by P.L. 119-21; IRS Fact Sheet FS-2026-10; Publication 5993; Pub 15-B
Work Opportunity Tax Credit (WOTC) — lapsed; claim the past, protect the file
The honest status first: the Work Opportunity Tax Credit — worth 25% or 40% of first-year wages, from $1,600 up to $9,600 per hire depending on the target group (veterans at the top; also SNAP and TANF recipients, ex-felons, SSI recipients, the long-term unemployed, and others) — does not apply to employees who begin work after December 31, 2025. Its authorization ended on that date and Congress has not renewed it; the IRS says so on its own WOTC page. What remains real: hires who began on or before that date still generate claimable credits, figured on Form 5884 after the state workforce agency certifies the worker — certification that started with Form 8850 pre-screening, which had to reach the agency within 28 days of the start date. And the practical advice costs nothing: Congress has revived this credit retroactively after past lapses, so keep pre-screening new hires and keep the paperwork — just do not budget a 2026 hire around a credit that, today, is not law.
Claim it: Form 8850 (pre-screening, while authorized) → state certification → Form 5884
Authority: IRC §51; IRS, Work Opportunity Tax Credit (status: not applicable to employees beginning work after December 31, 2025)
Closing doors — real benefits, passed cutoffs
Printed so nobody prices a 2026 project around them — and so the people who still qualify under the old dates claim what is theirs.
§179D — energy-efficient commercial buildings deduction
The deduction for energy-efficient commercial building property — figured per square foot (for 2026, up to $5.94 per square foot when the prevailing-wage and apprenticeship requirements are met, per Rev. Proc. 2025-32) — was terminated by the 2025 law for any property whose construction begins after June 30, 2026. That date has passed. Two things survive it, and both are worth money: a project whose construction began on or before the cutoff still qualifies whenever it is placed in service, even years from now; and an owner who never claimed the deduction on qualifying property placed in service in an earlier year can generally still reach it through Form 3115, an accounting-method change carrying a §481(a) catch-up, rather than amended returns. Designers should note their version of the benefit — for government and tax-exempt buildings, the deduction is allocated to the designer. What no one should do is price a project starting today around a deduction the statute no longer offers it.
Claim it: Form 7205, in the year the property is placed in service (Form 3115 for unclaimed earlier years)
Authority: IRC §179D(i), added by P.L. 119-21 §70507; IRS, Energy Efficient Commercial Buildings Deduction
§45L — new energy-efficient home credit
Builders claimed $2,500 per new energy-efficient home meeting Energy Star requirements, or $5,000 per home certified Zero Energy Ready. The 2025 law terminated the credit for homes acquired after June 30, 2026 — and “acquired” is the hard word: the date the home is sold, or first leased, for use as a residence. A home finished, certified, and under contract that closed on July 1, 2026 earns nothing; there is no transition relief. Homes acquired on or before the cutoff keep their credit — claim it on Form 8908 for the year of acquisition, and remember unused general business credits carry forward. If your pipeline still shows 45L revenue on homes closing now, that line is the error this entry exists to catch.
Claim it: Form 8908, for the tax year in which the home was acquired
Authority: IRC §45L as amended by P.L. 119-21 §70508; IRS, New Energy Efficient Home Credit
Every figure on this page, with its source
- Tips, overtime, senior deductions: IRC §§224, 225, and 151(d)(5) (the last added by P.L. 119-21 §70103); IRS Fact Sheet FS-2025-03, “Tax deductions for working Americans and seniors”; IRS Tax Tip 2026-06.
- 2025 reporting transition: IRS Notice 2025-62 (employer penalty relief) and Notice 2025-69 (how individuals figure 2025 tips and overtime).
- Car-loan interest: IRC §163(h)(4); IRS Fact Sheet FS-2025-05; Publication 6126; final regulations TD 10054 — full treatment on /vehicles.
- WOTC status: IRS, Work Opportunity Tax Credit — the credit does not apply to employees who begin work after December 31, 2025; IRC §51; Form 8850 and Form 5884 instructions.
- §45B tip credit and its beauty-services expansion: IRC §45B as amended by P.L. 119-21; Instructions for Form 8846.
- §45E / §45T plan credits: IRS, Retirement Plans Startup Costs Tax Credit; Instructions for Form 8881.
- §44 / §190 accessibility pair: IRS, Tax Benefits for Businesses With Employees Who Have Disabilities; Form 8826; IRC §§44, 190.
- §41 payroll offset: IRS, Qualified Small Business Payroll Tax Credit for Increasing Research Activities; IRC §§41(h), 3111(f); Forms 6765 and 8974.
- §45S permanence and the premium method: P.L. 119-21 §70304; Instructions for Form 8994.
- §45F enhancement (2026 rates and caps): P.L. 119-21 §70401; Instructions for Form 8882.
- §179D termination (construction beginning after June 30, 2026): IRC §179D(i), added by P.L. 119-21 §70507; 2026 per-square-foot ceiling per Rev. Proc. 2025-32. §45L termination (homes acquired after June 30, 2026): P.L. 119-21 §70508; Form 8908.
- §1202 QSBS tiers, $15 million cap, $75 million ceiling: IRC §1202 as amended by P.L. 119-21; Schedule D instructions.
- §1244 ordinary-loss limits ($50,000 / $100,000), the $1,000,000 issuance ceiling, and the active-business gross-receipts test: IRC §1244; Treas. Reg. §1.1244(b)-1.
- §127 educational assistance ($5,250 combined cap; student-loan repayment made permanent; cap indexed for tax years after 2026): IRC §127 as amended by P.L. 119-21; IRS Fact Sheet FS-2026-10; Publication 5993.
Keep going: the Deduction & Credit Library carries the standing credits (EITC, child, education, energy years still claimable), “Am I Missing Anything?” checks your situation against them, and the Life Playbooks walk the big ones end to end. A credentialed pro earns their fee on the entries with gates — §1202 above all.