Yes, significant tax breaks for buying a house in 2025 exist, including a boosted $40,000 State and Local Tax (SALT) deduction cap, permanent $750,000 mortgage interest deductions, and potential energy-efficient home credits. First-time buyers may access credits up to $15,000, and 100% bonus depreciation is available for qualified real estate investments.
For 2025, there isn't a universal federal first-time homebuyer tax credit currently enacted, but several bills were introduced in Congress, like the Bipartisan American Homeownership Opportunity Act (offering up to $50k credit) and the First-Time Homebuyer Tax Credit Act (up to $15k), though these haven't passed into law yet; eligible buyers in 2025 might use existing benefits like the Mortgage Interest Credit (with a Mortgage Credit Certificate) or deduct mortgage interest and property taxes, while state-specific programs may also offer aid.
Bipartisan American Homeownership Opportunity Act of 2025
This bill provides a new refundable tax credit for first-time homebuyers and a new tax credit to home builders for the construction of starter homes, both subject to limitations.
Under the new income tax regime for 2025-26, any taxable income up to ₹12,00,000 attracts a full rebate of ₹60,000 (under Section 87A), resulting in a nil tax liability.
These Home Improvement Projects Are Tax Deductible
From 2025 to 2028, adults age 65+ can claim a temporary bonus deduction of $6,000 if single or $12,000 if married filing jointly. For the 2025 tax year, the total standard plus bonus deduction for those age 65 and older is $21,750 for a single person and $43,500 for a married couple filing a joint return.
The $4,000 federal tax credit refers to the Used Clean Vehicle Credit, available for purchasing a qualified pre-owned electric or fuel cell vehicle, equal to 30% of the sale price (up to $4,000) but subject to income limits and vehicle requirements (like model year and purchase price). This credit, established by the Inflation Reduction Act, helps lower your tax bill, not just your taxable income, and requires dealer participation for reporting the sale to the IRS.
A recent tax law ("One Big Beautiful Bill") introduced a new $6,000 bonus deduction for Americans aged 65 and older, available for tax years 2025-2028, reducing taxable income, not the tax itself, with income phase-outs starting at $75,000 MAGI for singles and $150,000 for joint filers. This deduction adds to existing standard deductions, provides up to $12,000 for couples, and requires a Social Security number and filing status other than Married Filing Separately.
What is the Biden First-Time Home Buyer Act? Introduced in 2021 as the First-Time Homebuyer Act and reintroduced as the First-Time Homebuyer Tax Credit Act in 2024 under the Biden administration, the bill would provide a refundable tax credit of up to $15,000 for first-time home buyers.
Taxpayers will claim the credit on new IRS Form 5405, First-Time Homebuyer Credit. Only the purchase of a main home located in the United States qualifies. Vacation homes and rental property are not eligible. For a home that you construct, the purchase date is the first date you occupy the home.
Mortgage interest deduction limit is now permanent
The limit was set to expire at the end of 2025, but the OBBBA makes it permanent. The threshold will continue to be: $750,000 (for most filers) $375,000 (for Married Filing Jointly)
Mortgage Interest Deductions
For most homeowners, the biggest tax benefit of owning a home in California comes from the mortgage interest deduction. Your mortgage lender will provide you with an IRS Form 1098 at the end of each year that itemizes how much you paid in interest on your loan.
Can I avoid capital gains taxes?
Who qualifies for the $6,000 senior deduction? People who turned 65 by Dec. 31, 2025, are eligible for the new deduction, according to the IRS. The deduction provides $6,000 for each qualifying individual, or $12,000 for married couples who both qualify. The tax break is subject to income limits.
For the 2025 tax year, major write-offs include significantly increased Standard Deductions (e.g., $15,750 single, $31,500 married filing jointly), a new deduction for qualified overtime pay (up to $12,500/person), and potential deductions for U.S.-made vehicle loan interest, thanks to the "One Big Beautiful Bill". Other key changes involve higher HSA limits ($4,300 self, $8,550 family) and changes to SALT deductions, with some energy credits phasing out, making 2025 a year with new opportunities and expiring benefits, requiring careful planning.
The 2025 tax legislation signed into law by President Trump, commonly referred to as the One Big Beautiful Bill Act, largely preserves the existing capital gains tax framework. Long-term capital gains rates remain set at 0%, 15% and 20%, with no changes to the underlying brackets.
In the 2025-26 Budget, the Financial Secretary proposed a one-off reduction of 100% of the final tax for the year of assessment 2024/25 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $1,500 per case.