2025 Tax Changes

Many taxpayers continue to face balances due at tax time  because their federal withholding has not kept pace with changes in tax law and income. Small increases in take-home pay over time often reduce withholding without taxpayers realizing it, resulting in an unexpected amount owed when filing a return. This issue is especially common for taxpayers who earn overtime, tips, have multiple jobs, or experience income changes  during the year. Reviewing and updating Form W-4  ca

Beginning in the 2026 tax year, new federal rules will change how charitable contributions are deducted. Taxpayers who do not  itemize deductions may be eligible to deduct up to $1,000 in cash charitable donations , or $2,000 for married couples filing jointly , even when taking the standard deduction. For taxpayers who itemize deductions, charitable contributions will only be deductible to the extent they exceed 0.5 percent of adjusted gross income . This change may reduce t

Beginning with the 2025 tax year, taxpayers who purchase a new vehicle  may be eligible to deduct auto loan interest , even if they do not itemize deductions. This temporary federal deduction applies to vehicles purchased between 2025 and 2028  and is available for qualifying personal-use vehicles. To be eligible, the vehicle must meet specific requirements, including final assembly in the United States  and a qualifying loan structure secured by the vehicle. Income limits ap

Beginning with the 2025 tax year, eligible taxpayers age 65 and older  may qualify for a new temporary federal tax deduction. The Senior Deduction  allows up to $6,000 per qualifying individual  for tax years 2025 through 2028 . Married couples must file married filing jointly  to claim the deduction for both spouses. This deduction applies whether you itemize deductions or take the standard deduction, although it does phase out at higher income levels. While it does not elim

Beginning with the 2025 tax year, eligible taxpayers who earn overtime compensation may qualify for a new temporary federal tax deduction. The No Tax on Overtime deduction  allows individuals to deduct the portion of overtime pay that exceeds their regular hourly rate. This deduction is available for tax years 2025 through 2028 . The maximum annual deduction is $12,500 for single filers  and $25,000 for married couples filing jointly , subject to income limitations. It is imp

Beginning with the 2025 tax year, a new federal tax deduction may benefit tipped workers. The No Tax on Tips deduction  allows eligible individuals to deduct up to $25,000 of qualified tips  from taxable income. This deduction applies whether a taxpayer itemizes deductions or takes the standard deduction and is available through tax year 2028. It is important to note that tips are still required to be reported as income . The deduction applies only to qualified tips earned in

Several tax provisions will shift beginning in 2025 under the One Big Beautiful Bill Act. These changes affect the state and local tax deduction, the educator expense deduction, and the treatment of mortgage insurance premiums. Understanding these updates now can help taxpayers plan ahead and avoid surprises during next year’s filing season. SALT Deduction Cap Increases to 40,000 The state and local tax deduction, known as the SALT deduction, has been limited to 10,000 since

Beginning in late 2025, the IRS will shift away from paper-based payments and paper refund checks. This new electronic payment mandate is part of a federal payment-modernization initiative supported by the U.S. Treasury. The IRS notes that electronic payments reduce delays, improve accuracy, and provide immediate confirmation that a payment was received. IRS payment systems: https://www.irs.gov/payments IRS Direct Pay: https://www.irs.gov/payments/direct-pay Treasury announce