OB3 - Some Additional Notes

Going beyond the tips, overtime, and senior deductions, let’s look at some other provisions that were included in the new tax bill. This is a really condensed overview as the bill included 100’s of provisions - keep an eye on our newsletter and this blog page for future articles on other provisions.

Car Loan Interest Deduction

The bill allows for a new deduction on qualified passenger vehicle loan interest - cars, trucks, motorcyles that are for personal use. The vehicle must be new and purchased after December 31, 2024, and is limited to those vehicles that had their final assembly completed in the United States. This is different from previous deductions, like the EV credit, where final assembly needed to be in North America. The deduction is limited to $10,000 per tax year and is phased out based on modified adjusted gross income (MAGI), as with most deductions.

Mortgage Insurance Premium (PMI) Deduction

Bringing back a provision from tax law of yesteryear, PMI is considered qualified residence interest and is a deductible item once again. Also subject to phase outs, available if your itemizing.

Enhanced Deductions for Educators (Teacher Credit)

The bill provides for a special itemized deduction for the unreimbursed expenses incurred as educators. You must itemize in order to use this provision. This is for those expenses greater than the $350 allocation to teachers - not all expenses or educators will qualify for this. Provide specifics to your tax preparer to make sure you qualify.

Green Tax Credit Terminations

OB3 terminated the credit available for previously owned “clean” vehicles. The termination applies to vehicles acquired after September 30, 2025. However, if you had a written binding contract in place plus made a payment (deposit) on or before September 30, 2025, you may still be eligible to claim the credit once you place the vehicle in service, even if that’s after 9/30/25.

Businesses Considerations

Bonus Depreciation

OB3 made bonus depreciation permanent and allows us to designate how we’d like to use bonus depreciation for property placed in service after January 19, 2025 - huge tax planning opportunity!

Green Tax Credit Terminations

Same as above, the bill eliminates the commercial clean vehicle credit for vehicles acquired after September 30, 2025. Thankfully, the same “exception to the rule” applies as it does to personal credits.

Employee Retention Credit

Received ERC money in 2025? Make sure you’ve clarified with your preparer whether or not you amended your prior year returns to accommodate these credits. If you haven’t, speak to your preparer about potential tax impacts this income generates in 2025.

Sources:

Gorczynski, Tom. Compass Tax Educators. Federal Tax Update (2025)

Wolters Kluwer, Federal Tax Updates (2025)