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Important Tax Changes for Tax Year 2025 (Filed in 2026)

1. Major New Law — One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA) significantly reshaped individual income taxes for 2025 by making many prior tax provisions permanent and adding new deductions and reliefs. Most changes are effective for tax year 2025 and expire after 2028 unless extended.

2. Standard Deduction and Personal Exemptions

The standard deduction increased for all filing statuses for 2025 returns.

Personal and dependent exemptions remain eliminated (as under prior law) but other deductions have been added.

3. New Temporary Deductions (2025–2028)

Under the OBBBA, several temporary deductions were introduced that benefit many taxpayers:

  Senior Deduction: Individuals age 65+ may claim up to a $6,000 additional deduction ($12,000 for married couples), subject to income phase-outs.

Overtime Deduction: Qualified overtime income may be deductible up to $12,500 ($25,000 married filing jointly). TAXPAYER MUST PROVIDE PROOF OF THIS DEDUCTION FOR TAX YEAR 2025, AS EMPLOYER WILL NOT BE REQUIRED TO DO SO UNTIL TAX YEAR 2026

Tip Income Deduction: Qualified tips may be deductible up to $25,000 ($50,000 joint).

Car Loan Interest Deduction: Interest on qualified personal auto loans can be deductible up to $10,000.

  These deductions can be claimed whether or not the taxpayer itemizes, though they phase out at higher incomes.

4. Expanded SALT Deduction

The state and local tax (SALT) deduction cap was temporarily increased to $40,000 (or $20,000 for married filing separately) for taxpayers with income below certain thresholds.

5. Child Tax Credit Increase

The Child Tax Credit increased to $2,200 per qualifying child for the 2025 tax year, up from $2,000 previously.

6. Income Tax Brackets and Inflation Adjustments

Federal income tax brackets (10%–37%) remain and are adjusted for inflation for 2025.

Capital gains tax thresholds were also adjusted — for example, the 0% long-term capital gains bracket increases slightly from 2024 levels.

7. Refunds and Withholding

Because the IRS did not update withholding tables immediately to reflect the 2025 tax changes, many taxpayers may have higher withholding than necessary during the year, potentially leading to larger refunds when filing.

8. Business and Other Provisions

The law also includes various business tax changes and extensions of prior benefits — including certain pass-through deductions and temporary bonus depreciation rules — which can indirectly affect individual returns for pass-through business owners.

Bottom Line

Tax year 2025 brings some of the largest changes in federal individual tax law since the Tax Cuts and Jobs Act, with expanded deductions, a higher SALT cap, increased credits, and inflation-adjusted thresholds. Many of these provisions are temporary and scheduled to expire after 2028 unless extended by future legislation.Type your paragraph here.

$1,000 Trump Account 

(We can apply with your 2025 tax return. The program will not begin until after July 4th, 2026)


Federal Pilot Contribution
(This is the government-funded contribution — not just opening the account)
Who the $1,000 Is For
A child is eligible for the $1,000 federal contribution only if ALL of the following are met:
Born during the pilot window
Birth years: 2025 through 2028
U.S. citizen at birth
Citizenship must exist at birth, not later naturalization
Has a valid Social Security number
SSN must be issued before the election is made 
Trump Account election is properly filed
Election made using IRS Form 4547
Filed by an authorized individual (parent, guardian, etc.)
Only one federal contribution per child
Once the $1,000 is funded, it cannot be duplicated

 
Who May Make the Election for the $1,000
Same authorized individuals as the standard Trump Account:
Parent
Legal guardian
Adult sibling
Grandparent


For more information, see