2026 Tax Filing Season: Top 2025 Tax Deductions & Credits for NYC & Long Island Taxpayers

Tax season is here, and if you’re filing a 2025 return in 2026, there’s good news: Congress passed major tax changes that could put more money back in your pocket. The new law—called the One Big Beautiful Bill—raised the SALT cap, increased the Child Tax Credit, created brand-new deductions for tips and overtime, and doubled the Section 179 limit for small business owners. Everyone should know the top 2025 tax deductions & credits for the 2026 tax filing season.

For NYC and Long Island taxpayers, these changes hit close to home. High property taxes in Nassau and Suffolk County, steep New York State income taxes, and the unique challenges of running a business in the five boroughs all factor into your 2025 tax deductions strategy.

Sundack CPA serves taxpayers across Manhattan, Brooklyn, Queens, the Bronx, Staten Island, and Long Island—including Melville, Nassau County, and Suffolk County. This guide breaks down what changed, what credits drive the biggest refunds, and how to stay audit-ready when you file.

What Changed for Your 2025 Tax Return

The IRS opened the 2026 filing season on January 26, 2026. The deadline for most filers is April 15, 2026, with an automatic extension available to October 15 if you need more time to file (but not more time to pay).

Here’s what’s different this year:

The SALT Cap Jumped to $40,000

For years, NYC and Long Island homeowners hit the $10,000 SALT cap and couldn’t deduct another dollar of their property and state income taxes. That changed for 2025 tax returns.

The new SALT deduction limit is $40,000 for most filers ($20,000 if married filing separately). If your modified adjusted gross income exceeds $500,000, the cap phases down by 30 cents for every dollar over the threshold until it bottoms out at $10,000 once you hit $600,000.

For a Long Island family paying $18,000 in property taxes plus $15,000 in New York State income tax, this change alone could unlock $23,000 in additional 2025 tax deductions compared to last year.

Standard Deduction Increased

The 2025 standard deduction amounts are:

• Single or Married Filing Separately: $15,750
• Married Filing Jointly or Qualifying Surviving Spouse: $31,500
• Head of Household: $23,625

These amounts are higher than 2024, so you’ll only benefit from itemizing if your total deductions—SALT, mortgage interest, charitable contributions, and medical expenses above 7.5% of AGI—exceed your standard deduction.

New 2025 Tax Deductions You Didn’t Have Before

The One Big Beautiful Bill created four brand-new deductions that weren’t available on your 2024 return:

No Tax on Tips: If you work in a job that customarily receives tips—restaurants, hospitality, personal services—your qualified tip income may now be deductible. The IRS is publishing a list of eligible occupations. For NYC’s massive restaurant and service industry workforce, this is a significant new break.

No Tax on Overtime: You can deduct up to $12,500 of qualified overtime compensation ($25,000 if married filing jointly). This applies to the premium portion of overtime pay required under the Fair Labor Standards Act—the “and-a-half” part of time-and-a-half. Your employer reports this in Box 14 of your W-2.

Car Loan Interest Deduction: You can deduct up to $10,000 per year in interest paid on a loan for a new personal-use vehicle with final assembly in the United States. The loan must have originated after December 31, 2024. Lease payments don’t qualify.

Enhanced Senior Deduction: Taxpayers 65 and older can claim an additional deduction of up to $6,000 ($12,000 for couples where both qualify). This phases out starting at $75,000 MAGI for single filers and $150,000 for joint filers. This stacks on top of the existing age-based standard deduction increase.

Clean Vehicle and Energy Credits Expired Early

If you were planning to buy an electric vehicle or install solar panels, the window closed faster than expected:

• Clean vehicle credits (new, used, and commercial) ended for vehicles acquired after September 30, 2025
• Home energy credits (25C and 25D) ended for property placed in service after December 31, 2025

If you made a qualifying purchase before those deadlines, you can still claim the credit on your 2025 return. Keep your purchase agreements, time-of-sale reports, and installation receipts.

2025 Tax Deductions That Move the Needle for Individuals

Let’s focus on the deductions and credits that actually drive refund outcomes for NYC and Long Island filers.

Itemized Deductions Worth Evaluating

State and Local Taxes (SALT): The $40,000 cap makes itemizing worthwhile for many more homeowners this year. If you pay significant Nassau or Suffolk County property taxes plus New York State income tax, add them up. You might clear the standard deduction threshold for the first time in years.

Mortgage Interest: You can deduct interest on up to $750,000 of acquisition debt ($375,000 if married filing separately). With high home values across Long Island and NYC, this remains a major deduction for homeowners who itemize. Keep your Form 1098 and track any refinancing carefully—the rules on what qualifies as acquisition debt matter.

Charitable Contributions: Cash donations to qualifying organizations are generally deductible up to 60% of AGI. Donations of appreciated stock can be even more tax-efficient. The key is documentation: get written acknowledgment for any gift over $250 and keep records of everything.

Medical Expenses: You can only deduct unreimbursed medical expenses that exceed 7.5% of your AGI. This tends to matter most for families with major surgeries, long-term care costs, or clustering of medical expenses in a single year.

2025 Tax Credits That Drive Refunds

Child Tax Credit: For 2025, the maximum Child Tax Credit increased to $2,500 per qualifying child under 17. Up to $1,700 per child is refundable as the Additional Child Tax Credit, meaning you can get money back even if your tax liability is zero. Eligibility depends on the child’s age, relationship, residency, Social Security number, and your income.

Earned Income Tax Credit: The EITC remains one of the largest refund drivers for low-to-moderate income workers. The 2025 maximum credit amounts are:

• No qualifying children: $649
• One qualifying child: $4,328
• Two qualifying children: $7,152
• Three or more qualifying children: $8,046

Income limits vary by filing status and number of children, and your investment income must be $11,950 or less. If you qualify for the EITC, expect your refund to be held until mid-February under the PATH Act, with most refunds arriving by early March.

Education Credits: The American Opportunity Tax Credit offers up to $2,500 per eligible student for the first four years of college. The Lifetime Learning Credit provides up to $2,000 per return for qualified tuition and expenses. Both have income limits, and you’ll need Form 1098-T from the school plus records of what you actually paid.

Child and Dependent Care Credit: If you pay for childcare so you can work, you may qualify for a credit based on your expenses (up to $3,000 for one child or $6,000 for two or more) multiplied by a percentage that ranges from 20% to 35% depending on your income. You’ll need your provider’s tax ID number.

Small Business 2025 Tax Deductions That Move the Needle

If you’re self-employed, run an LLC or S-Corp, or have gig income, your 2025 tax deductions strategy can significantly change your bottom line.

Deductible Business Expenses 2025

At the foundation, business expenses must be ordinary (common in your trade) and necessary (helpful and appropriate). The most commonly missed deductions for NYC and Long Island small businesses include software subscriptions, professional development, advertising, the business portion of cell phone and internet, and office supplies.

The most commonly challenged deductions are meals, vehicles, home office, and anything that looks personal but gets labeled as business. Our approach at Sundack CPA: if you can’t substantiate it with receipts, logs, and a clear business purpose, don’t claim it.

Home Office Deduction 2025

The home office deduction 2025 is available only if you use a dedicated space regularly and exclusively for business—and only if you’re self-employed. W-2 employees working remotely don’t qualify, even if they never set foot in a corporate office.

You have two options:

• Simplified method: $5 per square foot, up to 300 square feet (maximum $1,500)
• Actual expense method: Calculate your actual costs (rent/mortgage interest, utilities, insurance, repairs) based on the percentage of your home used for business

For NYC apartment dwellers, the “exclusive use” requirement is where claims often fail. A desk in a bedroom that’s also used for sleeping or a kitchen table that doubles as family dinner space won’t qualify. Document your setup with photos and a floor plan.

Vehicle Expenses and Mileage

If you use your car for business, you can deduct either actual expenses or the standard mileage rate. For 2025, the business mileage rate is 70 cents per mile.

Either way, you need contemporaneous mileage logs. “Contemporaneous” means recorded at the time of the trip, not reconstructed in March when you’re scrambling to file. Apps that track mileage automatically are worth the investment.

NYC-specific reality: congestion pricing, tolls, and parking create many small transactions. If you don’t reconcile these monthly, you’ll either miss deductions or create a messy paper trail that won’t hold up under scrutiny.

Business Meals

For 2025, the general rule is that 50% of qualifying business meal costs are deductible. The meal must be directly related to business, you must be present, and it can’t be lavish or extravagant. Entertainment expenses (concerts, sporting events) are not deductible, even if you talk business.

For NYC’s client-facing businesses where coffee meetings and working lunches are the norm, this adds up. Keep receipts with notes about who attended and the business purpose.

Section 179 and Bonus Depreciation

If your business is buying equipment, vehicles, furniture, or making building improvements, depreciation choices can dominate your tax outcome.

Section 179: For 2025, you can expense up to $2,500,000 of qualifying property in the year you place it in service. This limit phases down dollar-for-dollar once your total purchases exceed $4,000,000. The deduction can’t exceed your business taxable income for the year.

Bonus Depreciation: The One Big Beautiful Bill restored 100% bonus depreciation for qualified property placed in service after January 19, 2025. Property placed in service between January 1 and January 19, 2025 qualifies for only 40% bonus depreciation—so the exact placed-in-service date matters.

This is a high-dollar area. Don’t guess on dates or eligibility. Match your invoices, delivery records, and fixed asset schedules, and work with your CPA to optimize the timing.

Qualified Business Income Deduction

If you’re a pass-through business owner (sole proprietor, partner, S-Corp shareholder), you may qualify for the QBI deduction—potentially up to 20% of your qualified business income. The calculation involves limitations based on W-2 wages, property, and income thresholds, and it’s claimed on Form 8995 or 8995-A.

Even if tax planning isn’t your focus, QBI is too valuable to ignore if you’re eligible.

New York State Tax Credits 2025 and NYC Tax Considerations

Federal taxes are only part of the picture. New York has its own standard deduction, its own credits, and—for NYC residents—an additional layer of city taxes.

New York Standard Deduction

New York doesn’t simply copy the federal standard deduction. For 2025, the NY standard deduction is $8,000 for single filers and $16,050 for married filing jointly. You could be a standard-deduction filer federally and still need to itemize on your New York return, or vice versa.

New York State Tax Credits 2025

Empire State Child Credit: New York enhanced this credit for 2025. The credit is $1,000 per qualifying child under age 4, plus $330 per qualifying child ages 4-16. Phase-downs apply based on federal AGI and filing status.

New York Earned Income Credit: This refundable credit equals 30% of your federal EITC, reduced by any household credit. It’s claimed on Form IT-215.

College Tuition Credit: New York offers a separate tuition credit or itemized deduction for qualifying college expenses, claimed via Form IT-272.

Real Property Tax Credit: Lower-to-moderate income homeowners and renters may qualify for this credit through Form IT-214.

NYC-Specific Taxes and Credits

NYC School Tax Credit: NYC residents with income of $250,000 or less may qualify for a fixed credit ($63 or $125 depending on filing status) plus a rate reduction amount.

NYC Earned Income Credit: Ranges from 10% to 30% of your federal EITC, depending on your New York AGI.

NYC Unincorporated Business Tax: If you operate an unincorporated business in NYC—sole proprietorship, partnership, or many LLC structures—the UBT applies. This catches many new business owners off guard. If you “just filed Schedule C” without considering UBT, you may have an unexpected NYC liability.

NY Credit for NYC UBT Paid: Form IT-219 allows certain NYC residents to claim a credit for UBT paid. If you have partnership or LLC interests with NYC activity, this is professional-review territory.

Pass-Through Entity Tax (PTET)

New York’s PTET is an election that allows qualifying pass-through entities to pay state taxes at the entity level. This can function as a workaround to the federal SALT cap for owners of eligible businesses. Because PTET involves entity-level elections, payment schedules, and complex interactions with individual returns, it’s not a DIY project.

Maximize Your Tax Refund and Stay Audit-Ready

Here’s how to approach your 2025 return strategically.

Step 1: Decide Whether to Itemize

Compare your potential itemized deductions (SALT up to $40,000, mortgage interest, charitable contributions, medical expenses above 7.5% of AGI) against the standard deduction for your filing status. For many NYC and Long Island homeowners, the raised SALT cap tips the scales toward itemizing this year.

Step 2: Identify Refundable Credits

The EITC and Additional Child Tax Credit can produce refunds even when you owe no tax. If you might qualify, gather the documentation to support your claim. Expect PATH Act timing rules to delay refunds until early March if you claim these credits.

Step 3: Capture Time-Sensitive Credits

If you purchased a qualifying electric vehicle by September 30, 2025, or completed home energy improvements by December 31, 2025, you can still claim those credits. Verify that your dates meet the IRS definitions for “acquired” and “placed in service.”

Step 4: Lock Down Business Recordkeeping

For business owners, the largest deductions are also the most scrutinized. Your vehicle logs, home office documentation, equipment invoices, and placed-in-service dates need to be organized before you file—not reconstructed under audit pressure.

Document Checklist

Before you meet with your tax preparer or file your return, gather:

• Social Security numbers for all household members
• Prior-year tax return
• W-2s from all employers
• 1099s (NEC, MISC, INT, DIV, B, K-1)
• Property tax bills
• Mortgage interest Form 1098
• Charitable contribution receipts and acknowledgment letters
• Childcare provider tax ID (for Form 2441)
• College tuition Form 1098-T
• Business mileage logs
• Home office square footage and expense records
• Equipment invoices with placed-in-service dates
• NY and NYC estimated tax payment records

Key Filing Season Dates

• January 26, 2026: IRS begins accepting 2025 returns
• February 2, 2026: Deadline for employers to furnish W-2s
• Mid-February 2026: PATH Act hold lifts for EITC/ACTC refunds
• March 2, 2026: Most early EITC/ACTC refunds expected (direct deposit, error-free returns)
• April 15, 2026: Federal filing and payment deadline
• October 15, 2026: Extension filing deadline (payment was still due in April)

When to Hire a Tax Preparer NYC or CPA Long Island

For straightforward W-2 returns with no complications, tax software can get the job done. But in the NYC and Long Island market, complexity piles up fast.

Consider professional tax preparation Long Island or a tax preparer NYC if you have:

• Multi-state income or residency questions
• Significant itemized deductions under the new SALT rules
• Self-employment with vehicles, home office, or equipment
• Partnership or S-Corp K-1 income
• PTET elections or allocations
• NYC Unincorporated Business Tax exposure
• Rental properties or investment income
• Major life changes (marriage, divorce, new business, home purchase)

The cost of professional help is almost always less than the cost of missed deductions, IRS notices, or audit defense.

Common Mistakes That Cost You Money

Claiming home office deduction 2025 without exclusive use: If your “office” doubles as a guest room or family space, it doesn’t qualify. The simplified method is easier, but eligibility still matters.

Missing the bonus depreciation date: Property placed in service January 1-19, 2025 gets 40% bonus depreciation. Property placed in service after January 19, 2025 gets 100%. One week can make a major difference.

Forgetting NYC UBT: New York City unincorporated business tax is easy to overlook, especially for first-time business owners. If you have Schedule C income from work performed in NYC, check your UBT exposure.

Reconstructing mileage logs: The IRS knows the difference between contemporaneous records and year-end guesswork. Start logging now for 2026.

EITC errors that trigger bans: Getting the EITC wrong can result in a two-year or ten-year ban from claiming the credit. If you’re not certain about qualifying child rules, residency, or income, get professional help.

Let Sundack CPA Review Your 2025 Return Strategy

Serving NYC and Long Island taxpayers, Sundack CPA can help you navigate the new 2025 tax deductions landscape—whether you’re itemizing under the higher SALT cap, maximizing small business tax deductions 2025, claiming the new tips and overtime breaks, or managing NYC residency credits and UBT exposure.

If your situation is complex, don’t leave money on the table. Contact our team in Melville to schedule a consultation before the April 15 deadline.

Sundack CPA | Serving Manhattan, Brooklyn, Queens, Bronx, Staten Island, Nassau County & Suffolk County

This content is for informational purposes only and does not constitute tax advice. Tax rules depend on your specific facts, filing status, income, and documentation. Consult a qualified tax professional for advice tailored to your situation.