Tax Law Changes 2025

Several tax changes are in effect for the 2025 tax year, impacting both individuals and businesses. Here is a quick snapshot of what has changed:

For Individuals:

• Standard Deduction: The standard deduction has increased. For single filers, it's $15,000, and for those married filing jointly, it's $30,000.

• Tax Brackets: Income thresholds for tax brackets have been adjusted upwards due to inflation.

• Child Tax Credit: The maximum child tax credit remains at $2,000 per qualifying child.

• Earned Income Tax Credit: The maximum Earned Income Tax Credit has increased, particularly for families with three or more qualifying children.

• Retirement Savings: Contribution limits for 401(k) plans have increased to $23,500.

• Gift Tax Exclusion: The annual gift tax exclusion has risen to $19,000.

• Estate Tax Exemption: The estate tax exemption amount has increased to $13.99 million. 

  
  

For Businesses:

• Bonus Depreciation: Bonus depreciation, allowing businesses to immediately deduct a large percentage of the cost of eligible assets, may be extended or modified.

• Section 199A Deduction: The deduction for qualified business income may be increased and made permanent.

• Clean Energy Credits: Some clean energy tax credits may be phased out or repealed.

• Excise Taxes: Excise taxes on private university endowments and private foundations may be increased. 

  
  

Important Considerations:

• TCJA Expiration: Many provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. This could lead to significant changes in tax law for 2026 and beyond unless Congress acts to extend them.

For more specific information on tax law changes for 2025, go directly to the IRS website:  https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025