2025 tax planning guide

tax planning guide considerations for 2025

• Tax brackets: The seven tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent. The income thresholds for each bracket have increased due to inflation.
• Standard deduction: For 2025, the standard deduction is $15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of household. 

• Bonus senior deduction: Taxpayers aged 65 or older are eligible for an additional $6,000 deduction ($12,000 for married couples if both qualify). This benefit phases out for those with modified adjusted gross income (MAGI) over $75,000 for single filers and $150,000 for married filers.
• “No tax on tips”: Qualified tipped workers can deduct up to $25,000 in tips from their income. The deduction begins phasing out for single filers with MAGI over $150,000 ($300,000 for joint filers).
• “No tax on overtime”: A deduction of up to $12,500 ($25,000 for joint filers) is available for qualified overtime compensation. The same MAGI thresholds apply as with the tips deduction.
• Car loan interest deduction: Taxpayers can deduct up to $10,000 in interest on a personal loan for a new, U.S.-assembled vehicle. This benefit phases out for single filers with MAGI over $100,000 ($200,000 for joint filers). 

• Child Tax Credit (CTC): The maximum credit is permanently increased to $2,200 per qualifying child. The refundable portion is capped at $1,700.
• State and Local Tax (SALT) deduction: The deduction cap is temporarily raised from $10,000 to $40,000 for tax years 2025 through 2029. It begins to phase out for filers with MAGI over $500,000.
• Retirement contributions: The limit for 401(k) plans increases to $23,500. Catch-up contributions for those ages 50 and over remain at $7,500.
• IRA contributions: The annual contribution limit remains $7,000. Phaseout levels for determining eligibility for Roth IRAs and deductible contributions to traditional IRAs have increased.
• Capital gains: The income thresholds for long-term capital gains tax brackets have been adjusted for inflation. 

• Corporate tax rate: The 21% flat corporate tax rate is now permanent.
• Qualified Business Income (QBI) deduction: The 20% deduction for pass-through entities (S-corps, partnerships, and sole proprietorships) is permanent. The phase-in ranges were also increased.
• Bonus depreciation: The 100% bonus depreciation for qualified property is permanently restored for assets placed in service after January 19, 2025. 

• Research & Development (R&D) expenses: Businesses can immediately expense domestic R&D costs, reversing the capitalization requirement imposed by the TCJA. Foreign R&D expenses must still be amortized over 15 years.
• Section 179 expensing: The maximum deduction and phaseout threshold for Section 179 are increased for 2025, allowing businesses to expense more capital expenditures.
• Form 1099-K reporting: The threshold for issuing Form 1099-K for electronic payments (e.g., Venmo, PayPal) has been significantly raised to more than $20,000 in gross payments and over 200 transactions.
• Excess business losses: The limitation on excess business losses under Section 461(l) is made permanent. 

• Clean energy credits: The bill accelerates the end of several clean energy tax credits. Tax credits for new and used electric vehicles, residential energy improvements, and EV charging stations all have accelerated expiration dates.
• Temporary deductions expire (2028): The new temporary deductions for tips, overtime, and car loan interest are set to expire after tax year 2028. 

• Analyze the OBBBA’s impact: Review the details of the “One Big Beautiful Bill Act” with clients, as many provisions are retroactive or phased in differently.
• Assess sunsetting provisions: With several clean energy credits and temporary deductions ending, help clients plan for these expiring benefits and understand the timing.
• Optimize QBI deductions: For pass-through entities, review the now-permanent QBI deduction rules and new phaseout thresholds to maximize client savings.
• Advise on R&D expensing: Inform business clients of the return to immediate expensing for domestic R&D costs and the strategic opportunities this presents.
• Estate and gift planning: The permanent increase to the estate and gift tax exemption offers new planning opportunities for high-net-worth clients.
• Communicate with clients: Proactive communication with clients is essential to help them understand these complex changes and create an effective tax strategy. 

Contact Us

Name *

First

Last

Email *

Phone: [Your Phone Number] *

Company Name: [If Applicable]

I am interested in (select one): *

• Personal Tax Planning
• Business Tax Planning
• Accounting Services
• Financial Consulting
• Other (Please Specify):

How did you hear about us? *

• Google Search
• Social Media
• Referral
• Advertisement
• Other (Please Specify):

Would you like to subscribe to our newsletter for tax tips and updates? *

• Yes
• No

By clicking "Download Now," you agree to our Privacy Policy and Terms & Conditions. *

Comment or Message

Submit