Recent Tax Updates

New Tax Law Provisions — 2025

Standard Deduction

• Single or Married Filing Separately: $15,750
• Head of Household: $23,625
• Married Filing Jointly / Qualified Surviving Spouse: $31,500

Senior Deduction

Additional deduction of $6,000 per person age 65 or older. Phases out when MAGI exceeds $75,000 ($150,000 MFJ).

Itemized Deductions — State and Local Taxes (SALT)

The SALT deduction limit increases to $40,000 ($20,000 MFS), reduced by 30% of modified AGI over $500,000 ($250,000 MFS), but not less than $10,000 ($5,000 MFS).

Child Tax Credit

Increases to $2,200 per qualifying child under age 17. SSNs for taxpayer(s) and child must be issued before the return due date.

Adoption Credit

Beginning in 2025, up to $5,000 of the adoption credit is refundable.

Energy Credits Terminated — 2025

Qualified Tuition Plan (529 Plan) Expansions

Effective for distributions made after July 4, 2025 — qualified expenses now include:

• K–12 tuition, curriculum materials, online instruction
• Tutoring or educational classes outside the home
• Standardized test or AP exam fees
• Dual enrollment in higher education
• Educational therapies for students with disabilities
• Postsecondary credentialing expenses

New Deductions — 2025

• Qualified Tips Deduction: Up to $25,000; phases out over $150k ($300k MFJ) MAGI.
• Overtime Pay Deduction: Up to $12,500 ($25,000 MFJ); phases out over $150k ($300k MFJ) MAGI.
• Vehicle Loan Interest Deduction: Up to $10,000 for qualified vehicle loan interest; phases out over $100k ($200k MFJ) MAGI.

Depreciation & Section 179

• Section 179 expense limit: $2,500,000
• Phase-out threshold: $4,000,000
• Special depreciation allowance: 100% (option to elect 40%)

Domestic Research & Experimental (R&E) Costs

Beginning in 2025, a full deduction is allowed for domestic R&E expenses (no amortization required).

Provisions Effective in 2026 or Made Permanent

• Individual income tax rates remain at lower TCJA levels.
• Standard deduction permanently increased.
• Personal exemption deduction permanently eliminated.
• Miscellaneous itemized deductions subject to 2% AGI threshold permanently ended (except educator expenses).
• Mortgage interest deduction limit ($750,000) made permanent.
• Disallowance of home-equity debt interest (if not used to buy, build, or improve home) made permanent.
• Mortgage insurance premiums remain deductible.
• Casualty loss limitation made permanent and expanded to certain state-declared disasters.
• New overall itemized deduction limit for taxpayers in the 37% bracket.
• Charitable contribution deduction limit for itemizers retained; $1,000 ($2,000 MFJ) allowed for non-itemizers.
• Moving expense deduction permanently eliminated (except Armed Forces).
• Wagering losses limited to 90% of winnings.
• Qualified Business Income (QBI) deduction made permanent and expanded.
• Alternative Minimum Tax (AMT) higher exemption and phase-out thresholds made permanent; phase-out rate increased to 50%.
• Form 1099 reporting threshold increased from $600 to $2,000.
• Alternative Fuel Vehicle Refueling Credit ends for property placed in service after June 30, 2026.
• New Energy Efficient Home Credit ends for homes acquired after June 30, 2026.
• Energy Efficient Commercial Building deduction ends for construction beginning after June 30, 2026.
• Trump Accounts: Available beginning July 4, 2026 for individuals under 18; earnings grow tax-deferred, contributions not deductible.
• Trump Account Pilot Program: IRS contributes $1,000 to eligible children born 2025–2028.