Some big tax changes are coming in 2025 and could affect people, businesses, and tax professionals. It's important to stay informed from updates in the tax laws to adjustments for inflation. Here’s a breakdown of what’s happening and how to prepare.

Key Tax Changes to Watch
1. Expiring Tax LawsThe Tax Cuts and Jobs Act (TCJA), passed in 2017, made several temporary changes that will end in 2025. Here’s what that means:
Tax Rates: Current tax rates may go up. For example, the highest rate could jump from 37% back to 39.6%.
Standard Deduction: The bigger deduction you can take now—$13,850 for single people and $27,700 for married couples—will shrink. Personal exemptions, which were removed, might come back.
Child Tax Credit: Families currently get $2,000 per child, but this could drop to $1,000 with stricter rules.
State and Local Tax Deduction (SALT): Right now, you can only deduct up to $10,000 in state and local taxes, but this limit is set to end in 2025. Some want to raise it to $20,000, while others prefer letting it expire.
If Congress doesn’t make changes, many Americans might see higher tax bills when these rules expire.
2. Inflation AdjustmentsThe IRS changes tax rules each year to keep up with inflation. Here’s what’s planned for 2025:
Tax Brackets: The income ranges for each tax rate will increase slightly, which helps avoid higher taxes just because of inflation.
Standard Deduction: This deduction will rise to $15,000 for single filers and $30,000 for married couples.
Earned Income Tax Credit (EITC): This credit helps low- and middle-income workers. The maximum credit will increase from $7,830 in 2024 to $8,046 in 2025.
These adjustments are designed to make sure inflation doesn’t unfairly increase your taxes.
3. Retirement Savings BoostsGood news if you’re saving for retirement: the IRS is letting you save more in 2025.
401(k) Plans: You can contribute up to $23,500, up from $23,000 in 2024.
Catch-Up Contributions: If you’re 50 or older, you can still add $7,500 more. But if you’re 60–63 years old, you can save an extra $11,250, giving you a chance to save even more as retirement gets closer.
These changes help you prepare for the future while keeping up with rising costs.
4. Possible New LawsWith a presidential election and Congress debating new ideas, more changes could come. Key topics include:
Keeping Tax Cuts: Some lawmakers want to make current lower tax rates permanent to avoid big increases for families.
Child Tax Credit: There’s a push to keep the $2,000 credit or even increase it to help families.
New Incentives: Congress may add tax breaks for things like clean energy or helping small businesses.
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