7 Mistakes You're Making with the New 2025 Tax Deductions (And How New Haven Taxpayers Can Fix Them)

Look, tax season is already here, and if you're still filing your taxes like it's 2024, you're leaving serious money on the table. The 2025 tax year brought some major changes: and I mean major: that most New Haven taxpayers don't even know about yet.

I've been preparing taxes for years, and I can't tell you how many folks walk into my office shocked when they find out they've been missing out on deductions they absolutely qualify for. The IRS isn't going to call you up and remind you about these new breaks. That's on you (or better yet, on your tax pro).

Let's break down the seven biggest mistakes I'm seeing right now and exactly how to fix them before you file.

Mistake #1: Not Claiming the Increased Standard Deduction

The standard deduction jumped significantly for 2025. We're talking $15,750 for single filers (up from $14,600) and $31,500 for married couples filing jointly (up from $29,200). That's not pocket change: it's a roughly 7.9% increase due to inflation adjustments.

How to fix it: Review whether itemizing still makes sense for you. Many taxpayers who previously itemized deductions may now benefit more from taking the standard deduction. Run the numbers both ways before you decide. If your itemized deductions don't exceed these new thresholds, take the standard deduction and save yourself the paperwork headache.

Mistake #2: Ignoring the New Tip and Overtime Income Deductions

Here's a game-changer that literally just passed: The "One Big Beautiful Bill" created four brand-new tax deductions for 2025. Two of them: tip income and overtime pay deductions: are flying completely under the radar for most workers in New Haven's restaurant, hospitality, and service industries.

How to fix it: If you earn tip income or overtime pay, document every dollar. Keep detailed records of your tips (not just credit card tips: cash counts too) and clearly identify overtime wages on your pay stubs. These new deductions can significantly reduce your taxable income. Don't assume your employer is tracking this correctly for tax purposes: verify it yourself.

Mistake #3: Missing Out on the Expanded SALT Deduction Cap

The State and Local Taxes (SALT) deduction cap increased from $10,000 to $40,000 for 2025. For Connecticut taxpayers dealing with high property taxes and state income taxes, this is massive.

New Haven property owners have been hit particularly hard by the old $10,000 cap. Now you can deduct up to $40,000 in combined state income taxes, local income taxes, real estate taxes, and personal property taxes.

How to fix it: Gather all your 2025 tax payment records immediately. This includes:

• Connecticut state income tax payments (including estimated quarterly payments)
• New Haven property tax bills
• Personal property tax on vehicles
• Any local income taxes paid

Add them up. If they exceed $10,000, you may benefit from itemizing instead of taking the standard deduction. Note that the $40,000 cap may be reduced based on your income level, so consult with a tax professional to determine your exact limit.

Mistake #4: Overlooking the New Car Loan Interest Deduction

This one's brand new for 2025, and honestly, most people have no idea it exists. You can now deduct interest paid on car loans: something that hasn't been available for personal vehicles in decades.

How to fix it: Contact your auto lender and request an interest statement for 2025 showing exactly how much interest you paid. This should be provided on a Form 1098 or similar statement. Keep this documentation with your tax records. The deduction applies to loans for personal vehicles, not just business use.

If you have multiple car loans, get statements for all of them. Every dollar of interest counts.

Mistake #5: Seniors Not Claiming the Enhanced Age 65+ Deduction

If you're 65 or older, there's an enhanced deduction available specifically for you in 2025. This is in addition to the increased standard deduction: meaning you get both benefits.

Many seniors in New Haven are missing this because they simply don't realize it's available or assume their age is automatically factored in.

How to fix it: When you file your return, ensure your date of birth is correctly entered. The enhanced deduction should be automatically calculated based on your age, but verify it appears on your return. If you're using tax software, look for the line item specifically related to the additional standard deduction for age 65+.

If you turned 65 at any point during 2025, you qualify for the full year: you don't need to pro-rate it.

Mistake #6: New Haven Residents Not Applying for Local Tax Relief Programs

Here's where it gets really specific to our area. New Haven offers multiple property tax relief programs that can save you hundreds or even thousands of dollars: but you must apply for them. They don't happen automatically.

The Elderly/Totally Disabled Homeowner Tax Credit is available if your income is under $55,100 (married) or $45,200 (single). There's also the City Senior Tax Relief program which freezes your property taxes if your income is below $78,470.

How to fix it: File your application with the New Haven Tax Assessor's office immediately. You'll need:

• Your 2024 income statements
• Social Security 1099 forms
• Proof of age or disability status
• Recent property tax bills

These programs have strict deadlines. Missing the deadline means waiting another full year while paying higher property taxes. Don't let that happen.

Mistake #7: Failing to Document Everything Properly

This might sound basic, but it's the mistake that causes the most problems during audits or amended returns. With all these new deductions available in 2025, the IRS will be scrutinizing returns more carefully.

How to fix it: Create a dedicated 2025 tax folder (physical or digital) and store:

• All W-2s and 1099 forms
• Receipt documentation for any itemized deductions
• Proof of tip income and overtime wages
• SALT payment receipts and property tax bills
• Car loan interest statements
• Records of any estimated tax payments
• New Haven tax relief program approval letters

Keep these documents for at least three years after filing. If you claim significant deductions, consider keeping them for seven years.

What This All Means for Your 2025 Tax Return

These aren't small changes: they're substantial shifts in how tax deductions work. Between the increased standard deduction, new deduction categories, and expanded SALT cap, many New Haven taxpayers will see dramatically different tax outcomes this year compared to previous years.

The catch? You have to know these changes exist and actively claim them. The IRS won't tell you you're missing deductions. They'll happily accept your return as filed and keep the money you could have saved.

Don't Leave Money on the Table

Tax law changes like these create opportunities: but only if you take action. Review your 2025 tax situation carefully, gather your documentation, and make sure you're claiming every deduction you're entitled to.

If you're feeling overwhelmed (and honestly, who wouldn't be with all these changes?), that's exactly what we're here for at Jose's Tax Service. We stay on top of every tax law change so you don't have to. Schedule your appointment before the April deadline rush hits, and let's make sure you're not leaving a single dollar on the table.

Your refund: or lower tax bill( is waiting.) Go claim it.