With just a few months remaining in the year, it’s a good time to review the 2025 tax law changes to see if you should consider making any 2025 moves while you still have time.
Some of the tax law changes kick in this year, while others start in 2026. And like previous tax laws, some of the new rules are scheduled to expire, while others are permanent.
We encourage everyone to have a high-level understanding of what tax rules have changed over the summer.
As you read our report, if something strikes you as interesting, please reach out so that we can provide you with more information. Also, this might be a good time to check with your tax professional about the law changes. There might be some action for you to take this year or perhaps to begin to prepare for.
Remember, we are associated with cfd Tax Preparation & Bookkeeping services, who are prepared to step in if you need help with the new rules.
Here’s a recap of the top items that we think most people should be aware of.
Tax Rates Extended
The tax law extended the current tax rates of 12 percent, 22 percent, 24 percent, 32 percent, and 37 percent. Had the TCJA, (Tax Cuts and Jobs Act), been allowed to expire, the rates were scheduled to revert to 15, 25, 28, 33, and 39.6 percent.
Starts: 2025
Standard Deduction
Increased to $15,750 for single filers and $31,500 for those filing jointly for 2025.
Starts: 2025
Note: The standard deduction will now be adjusted for inflation.
Senior Bonus Deduction
The new law introduced a $6,000 bonus deduction for filers aged 65
and older.
Starts: 2025. Ends in 2028.
Phases out? $75,000 for single filers, $150,000 married filing jointly. The deduction phases out completely at $175,000/$250,000.
Estate Changes
The OBBB Act increased estate and gift tax exemptions to $15 million for single filers and $30 million for those filing jointly.
Starts: January 1, 2026
Note: The exemption amount will now be adjusted for inflation.
Charitable Giving
Charitable contributions valued up to $1,000 for single filers and $2,000 for those filing jointly can now be deducted without itemizing.
Starts: January 1, 2026
State and Local Tax (SALT) Deduction
The SALT cap increases to $40,000 starting in 2025. The cap and income figures will increase by 1% yearly through 2029. If it is not extended, the SALT limit will revert to $10,000.
Starts: 2025. Ends in 2030.
Phases out? $500,000. When income exceeds $500,000, SALT won’t go below $10,000.
Child Tax Credit
Child tax credit increases to $2,200 (from $2,000).
Starts: 2025 with cost-of-living adjustments.
Phases out? $200,000 for single filers, $400,000 married filing jointly.
Dependent Care Assistance Programs
The exclusion from income for employer-provided dependent care assistance increases from $5,000 to $7,500.
Starts: January 1, 2026
American Family Account
Children born will get a one-time deposit of $1,000 from the federal government.
Starts: 2025. Ends in 2028.
Note: Parents and others can contribute up to $5,000/yr until the beneficiary turns 18.
Car Buyers
A $10,000/yr deduction on car loan interest is available. The car must be brand new and final assembly must be completed in the US.
Starts: 2025. Ends in 2028.
Phases out? $100,000 for single filers, or $200,000 married filing jointly. Phases out completely at $150,000/$250,000.
No Tax on Tips, Overtime
“No tax on tips” creates a $25,000 deduction for tip income, while “no tax on overtime” offers a $12,500 deduction for overtime pay for single filers, $25,000 deduction filing jointly.
Starts: 2025. Ends in 2028.
Phase out? Both phase out at $150,000, $300,000 married filing jointly.
Business Owner
The OBBB Act permanently establishes a 20% qualified business income deduction for sole proprietorships, partnerships, and S-Corps.
Start date: 2025
Phase out? Phases out at $197,300 for single filers, $394,600 for married filing jointly. Other limits apply.
The 2025 tax law changes are expected to find their way into almost everyone’s federal tax return over the next few years.
The biggest challenge we see is that the new rules further complicate the tax code in several ways, which might create challenges for some. In fact, we anticipate that the IRS will offer guidance on how to interpret some parts of the new rules, such as the changes to no taxes on tips and overtime.
So, we encourage you to reach out if you see anything confusing. We’re here to help you prepare for these changes.
- Congress.gov (July 2025)
- TaxFoundation.org (July 9, 2025)
- TaxPolicyCenter.org (July 10, 2025)
- TheFinancialBuff.com (July 20, 2025)
