Notable changes for tax year 2025
- Leslie Kamou
- May 21
- 2 min read
1. Standard Deduction Adjustments
The standard deduction is expected to increase, providing taxpayers with a higher threshold before taxable income is calculated.
2. Tax Bracket Adjustments
Income tax brackets might be adjusted for inflation, potentially affecting the rates applied to different income levels.
3. Retirement Contribution Limits
Contribution limits for retirement accounts like 401(k)s and IRAs may rise, allowing individuals to save more for retirement with tax benefits.
4. Capital Gains Tax Changes
Possible changes to capital gains tax rates could impact the taxation of investment profits, especially for high-income earners.
5. Child Tax Credit Modifications
Modifications to the child tax credit might involve changes in the amount or eligibility criteria, affecting families with dependents.
6. Deductions and Credits Updates
Updates to various deductions and credits may occur, including those related to education, healthcare, and energy efficiency improvements.
7. Estate and Gift Tax Exemptions
Changes to estate and gift tax exemptions could affect the amount individuals can transfer tax-free during their lifetime or upon death.
8. Reporting Requirements and Compliance
New reporting requirements for certain income types or business activities might be introduced, increasing compliance obligations for taxpayers.
9. Health Savings Account (HSA) Limits
Contribution limits for Health Savings Accounts may increase, allowing individuals to save more for medical expenses with tax benefits.
10. Changes to Business Deductions
Revisions to business deductions, including potential changes in the treatment of certain expenses, could impact business tax liabilities.
Taxpayers should stay informed about these changes as they prepare for the 2025 tax year to effectively optimize their tax situations.
The tax year 2025 adjustments outlined below generally apply to income tax returns to be filed starting in the 2026 tax season. The tax items for tax year 2025 that are of greatest interest to many taxpayers include the following dollar amounts:
Standard deductions. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction increases to $15,000, up by $400 from 2024. For married couples filing jointly, the standard deduction increases to $30,000, up by $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024.
