Tax Chatter

2025 Tax Year Updates: What You Need to Know

The One Big Beautiful Bill Act (OBBBA), signed into law this summer, brings sweeping changes to federal tax rules. Here's a breakdown of the most impactful updates for individuals and families.

Income Deductions & Credits

No Tax on Tips (Through 2028)

  • Deduct up to $25,000 in qualified tips from federal taxable income.

  • Phaseout begins at $150,000 income ($300,000 for married couples).

No Tax on Overtime Pay (Through 2028)

  • Deduct up to $12,500 ($25,000 for joint returns) for qualified overtime.

  • Same phaseout thresholds as tip deductions.

Child Tax Credit Increase

  • Credit rises to $2,200 per qualifying child, up from $2,000.

Extra Standard Deduction for Seniors (Through 2028)

  • Seniors receive an additional $6,000 standard deduction.

  • Phaseout ranges:

 

  • Single filers: $75,000–$175,000

  • Married couples: $150,000–$250,000

State & Local Tax Deduction Expanded

  • Itemizers can now deduct up to $40,000 in state and local taxes.

This visual compares 2025 vs. 2024 standard deduction amounts across filing statuses, including the new senior bonus.

2025 Federal Income Tax Brackets

Understanding where your income falls is key to planning deductions and credits.

This table breaks down tax rates by filing status and income range—from 10% to 37%.

Protect Your Personal Information (PII)

Federal agencies now require business organizations to have a security plan for handling customer/client PII. You should handle your PII with care as well.

What Counts as PII?

  • Name, address, phone number

  • Social Security number

  • Financial data (bank accounts, credit cards)

  • Tax documents (W-2s, 1099s)

Tips to Safeguard Your Info

  • Control access: Know who has your data. Close unused accounts and request deletion.

  • Secure your tax docs: Avoid mailing forms with exposed SSNs.

  • Stay alert: Use your free annual credit reports to monitor for suspicious activity.

 

 

15 Year-End Tax Tips

These strategies can help reduce your tax liability before the year ends:

  1. Make last-minute charitable donations (check itemized deduction limits).

  2. Use the $19,000 annual gift-giving exclusion.

  3. Review investments for capital gains/loss planning.

  4. Use the $3,000 net capital loss limit to offset income.

  5. Maximize the kiddie tax threshold ($1,350 unearned income).

  6. Fully fund retirement accounts.

  7. Identify household employees (for tax reporting).

  8. Donate appreciated stock held over a year.

  9. Take required minimum distributions (RMDs).

  10. Use up medical/dependent care account balances.

  11. Explore Roth IRA rollover options.

  12. Estimate and pay any remaining taxes.

  13. List expected 1099s and other forms.

  14. Review W-2 withholdings for next year.

  15. Organize your tax records early.

Tax Term to Know: Contemporaneous

“Contemporaneous” means your supporting records must be created at the time of the expense—not retroactively.

Applies to:

  • Charitable contributions

  • Business expenses and purchases

  • Mileage logs

  • Tip records

  • Gambling losses

  • Business travel

Tip: Your return cannot be filed until ALL documentation is in hand.  Please unsure all documents are securely uploaded in the portal or delivered in person.

 


This publication provides summary information regarding the subject matter at time of publishing.

Please call with any questions on how this information may impact your situation.

Kristina Bowen, EA

[email protected]

Office: 253-235-1710