Four individual income tax deductions created under the tax and spending law Trump signed in 2025 share the same built-in expiration. The write-off for tipped income, the deduction for overtime pay, the new break for interest on a vehicle loan, and the enhanced deduction for taxpayers 65 and older are each written into the federal tax code for a fixed four-year run. Every one of them covers tax years 2025 through 2028 and then lapses unless Congress passes new legislation to extend it.
A Four-Year Window, Not a Permanent Change
The law, formally titled the One Big Beautiful Bill Act, rewrote large sections of the individual income tax code when it took effect in 2025. Some of its provisions were made permanent, including an extension of lower marginal tax rates first set in 2017. The four deductions covered here were built differently. The IRS’s own summary of the new and enhanced deductions states plainly that the vehicle loan interest deduction and the enhanced senior deduction are each effective for tax years 2025 through 2028, and the agency’s separate guidance on the tips and overtime deductions repeats the identical four-year window.
That distinction changes how each deduction behaves on a tax return. A taxpayer who qualifies claims the deduction on returns filed for the 2025 through 2028 tax years, covering the filing seasons that run from early 2026 through early 2029. Starting with income earned in 2029, the deduction is gone from the tax code unless lawmakers vote to renew it before the window closes, according to the IRS’s published guidance on the four provisions.
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Tips and Overtime Run on the Same Clock
The deduction for qualified tips applies to employees and self-employed workers in occupations the IRS has identified as customarily and regularly receiving tips as of December 31, 2024, provided the income is reported on a Form W-2, Form 1099, or another specified statement. Filers may deduct up to $25,000 in reported tips each year, with the benefit phasing out once modified adjusted gross income passes $150,000 for a single filer or $300,000 for a married couple filing jointly, per the IRS’s Working Families Tax Cuts page for individuals and workers. The deduction is available whether or not a taxpayer itemizes.
The overtime deduction follows the identical four-year schedule. Workers may deduct the portion of overtime pay that exceeds their regular hourly rate, the added half of time-and-a-half compensation required under federal labor law, up to $12,500 a year for a single filer or $25,000 for a married couple filing jointly. The IRS’s own questions-and-answers page on the overtime deduction confirms the same $150,000 and $300,000 income phaseout thresholds that apply to the tips deduction, and the same 2025-through-2028 coverage period.
Car Loan Interest and the Senior Deduction
Interest paid on a loan used to buy a personal vehicle became deductible for the first time under the law, capped at $10,000 a year and phasing out for taxpayers with modified adjusted gross income above $100,000, or $200,000 on a joint return. The IRS lists this deduction on the same summary page as running through the 2028 tax year, tied to the identical four-year structure as the other three provisions.
Taxpayers 65 and older can claim the enhanced senior deduction of $6,000, or up to $12,000 for a married couple if both spouses qualify, with the benefit phasing out above $75,000 in modified adjusted gross income for a single filer or $150,000 for joint filers. The IRS’s eligibility page for the senior deduction states the deduction runs for tax years 2025 through 2028, matching the sunset date on the tips, overtime, and vehicle loan interest deductions.
What the 2028 Cutoff Means for Filers Now
None of the four deductions requires any action before the expiration date arrives. A taxpayer who qualifies this year, next year, or in any of the two years after that claims the deduction the same way each time, on the annual return covering that tax year. The change comes only after tax year 2028 closes: absent a new law extending or making the deductions permanent, none of the four would be available on a return filed for tax year 2029 or later.
The IRS describes the four provisions in identical terms across its published guidance: each one is effective for tax years 2025 through 2028, with no exception carved out for any of the four. That uniform language is the basis for the expiration date applying equally to the tips deduction, the overtime deduction, the vehicle loan interest deduction, and the enhanced senior deduction alike.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
