Now that the “Big Beautiful Bill” has become law, there are some notable tax changes coming soon – effective for 2025.
- The standard deduction increases from $15,000 to $15,750 for single filers, and from $30,000 to $31,500 for married filing jointly filers.
- The maximum child tax credit increases from $2,000 to $2,200 per child, with the refundable portion at $1,700.
- The state and local tax deduction temporarily increases from $10,000 to $40,000 (with phase-outs for incomes between $500,000-$600,000). This deduction limit is to increase by 1% through 2029, reverting back to $10,000 in 2030.
- Temporary $6,000 “bonus” deduction for Americans 65 and over (with phase-outs beginning with $75,000 single filer income or $150,000 married filing jointly income). Once the modified adjusted gross income reaches $175,000 for single filers, or $250,000 for joint filers, the deduction is fully phased out. This is in addition to the existing extra standard deduction for taxpayers 65 and over. This legislation authorizes the deduction through 2028. NOTE: This deduction is what many are confusing as “tax on social security income has been eliminated”.
- Deduct up to $25,000 per year of tip income from 2025 through 2028.
- Deduct up to $12,500 per Taxpayer on overtime pay from 2025 through 2028.
- Deduct up to $10,000 of annual interest on new auto loans from 2025 through 2028.
With many changes in store for 2025 taxes, we recommend that Taxpayers consult with a Tax Professional early to understand how these changes may specifically affect their tax situation and plan accordingly. Need assistance? Contact Bryson today!
