Dr. Friday Radio Show – July 5, 2025

The doctor is in, and she’s unpacking the “one big, beautiful bill” that was just signed into law. On this episode, Dr. Friday gives her first take on the massive tax changes set to take effect in 2025. What does this mean for your family, your business, and your retirement?

Listen in as Dr. Friday discusses the most significant updates, including a huge increase in the SALT deduction, the potential return of the car loan interest deduction, new tax credits for tip and overtime workers, and a major change to how Social Security benefits are taxed for many Americans. While the ink is barely dry and the IRS is still scrambling to create the new forms, Dr. Friday provides the essential information you need to start preparing now. Plus, she answers listener calls about the home sale exclusion, the nuances of the new Social Security deduction, and a crucial update on the Beneficial Ownership (BOI) reporting requirement for businesses.

Episode Summary

Here’s a breakdown of what we covered in this episode:

Breaking Down the New 2025 Tax Bill:

• SALT Deduction: The State and Local Tax (SALT) deduction cap is set to increase from $10,000 to $40,000 for most taxpayers, with a phase-out for individuals earning over $500,000.
• Tax-Free Tips & Overtime: A new credit is being introduced for income tax on tips (up to $1,300) and overtime pay (up to $1,400), primarily for workers in the 12% tax bracket. Social Security and Medicare taxes will still apply.
• Social Security Tax Relief: A new deduction or credit of 4,000−6,000 will be available for Social Security recipients, with income phase-outs starting around $75k for singles and $150k for married couples.
• Child Tax Credit: The credit is expected to be renewed at the $2,000 level, preventing the scheduled drop to $1,000.
• Car Loan Interest: The deduction for interest paid on car loans is back on the table, though specific details (like whether itemization is required) are still unknown.
• Charitable Deduction: An “above-the-line” deduction for charitable contributions for non-itemizers (similar to the one during COVID) is expected to return.

Caller Questions & Key Clarifications:

• A caller’s question prompts a crucial update on the Beneficial Ownership Information (BOI) report: As of March 2025, filing is voluntary for domestic companies with no foreign owners.
• The primary home sale exclusion ($250k single / $500k married) remains unchanged by the new bill.
• Dr. Friday confirms all these new tax provisions are effective for the 2025 tax year, which you will file in 2026.

IRS & Tax Filing Advice:

• Dr. Friday explains why 2024 tax refunds might be delayed, citing increased IRS fraud checks and return complexity.
• A reminder about the federal disaster extension, which pushes the filing deadline to November 3rd for affected taxpayers.
• The critical importance of staying in compliance by making quarterly estimated tax payments to avoid penalties and interest with the IRS.

Episode FAQ

Q: Will my tips and overtime pay be completely tax-free now?

A: Not entirely. The new law creates a tax credit against your federal income tax for tips and overtime pay, up to a certain limit ($1,300 for tips, $1,400 for overtime). This benefit is aimed at lower-income earners, likely those in the 12% tax bracket. You will still owe Social Security and Medicare taxes on this income. Dr. Friday stresses the importance of keeping detailed pay stubs as documentation will be required.

Q: Do I need to file that Beneficial Ownership Information (BOI) report for my small business?

A: This was a key clarification. As of March 21, 2025, the requirement to file the BOI report is voluntary for domestic companies that do not have any foreign owners or partners. If your company has foreign beneficial owners, you are still required to file.

Q: When do all these new tax changes take effect?

A: All the changes discussed from the new bill are effective for the 2025 tax year. This means they will apply to the income you earn in 2025, which you will file on your tax return in early 2026. They do not apply to your 2024 taxes.

Q: Is the deduction for car loan interest definitely back?

A: Dr. Friday mentioned this is included in the bill, but details are still emerging. We do not yet know if it will be an “above-the-line” deduction available to everyone or if it will require you to itemize your deductions.

Transcript

00:01-00:07 No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your financial woes. 00:07-00:08 She’s the how-to girl. 00:09-00:10 It’s the