2025 Tax Updates
As of December 6, 2024, several tax law updates are slated to impact U.S. taxpayers in 2025:
IRS Inflation Adjustments for Tax Year 2025
The Internal Revenue Service (IRS) has announced annual inflation adjustments affecting over 60 tax provisions for the 2025 tax year. Key changes include:
- Standard Deduction: For single filers and married individuals filing separately, the standard deduction increases to $15,000, up $400 from 2024. For married couples filing jointly, it rises to $30,000, a $800 increase.
- Tax Brackets: Income thresholds for tax brackets have been adjusted upward. For instance, the 35% tax rate now applies to incomes over $250,525 for single filers and $501,050 for married couples filing jointly.
Expiration of Tax Cuts and Jobs Act (TCJA) Provisions
Many individual tax provisions from the 2017 TCJA are set to expire at the end of 2025, potentially leading to significant changes in 2026:
- Income Tax Rates: Rates may revert to pre-2017 levels, resulting in higher taxes for many.
- Standard Deduction and Personal Exemption: The standard deduction could decrease, and personal exemptions may return.
- Child Tax Credit: The credit amount might be reduced, and eligibility criteria could tighten.
Potential Legislative Changes
The current administration and Congress are considering tax reforms that could affect future tax years:
- Extension of TCJA Provisions: Discussions are ongoing about extending certain TCJA provisions to prevent tax increases in 2026.
- New Tax Legislation: Proposals include changes to corporate tax rates, individual income taxes, and various deductions and credits.
Need help planning for these updates? Our team is here to help! Contact us today and start taking control of your tax planning!
