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2025 Tax Changes & Updates

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(For returns filed in 2026)


The IRS has released its annual inflation adjustments, and the new One Big Beautiful Bill (OB3 Act) introduces additional tax changes that begin in 2025 and 2026. Below is a complete breakdown of what taxpayers need to know for 2025 filing and planning.

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✅ 1. Standard Deduction Increases for 2025

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The IRS inflation adjustments raise the standard deduction to:

  • Single: $15,200

  • Married Filing Jointly: $29,200

  • Head of Household: $22,900

These increases reduce taxable income for most taxpayers.

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✅ 2. NEW OB3 Act – Additional Standard Deduction for Seniors (Starts 2025)

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Beginning January 1, 2025, seniors receive a new, major deduction increase:

✔ Extra $6,000 per taxpayer age 65+

  • Single 65+: +$6,000

  • Married filing jointly, both 65+: +$12,000

This is in addition to the IRS’s existing senior standard deduction add-on (~$1,550 per spouse).

A married senior couple in 2025 may see over $48,000 in total standard deduction depending on age.

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✅ 3. 2025 Federal Income Tax Brackets

All brackets rise due to inflation.

Single Filers

  • 10%: $0–$11,925

  • 12%: $11,926–$46,000

  • 22%: $46,001–$99,525

  • 24%: $99,526–$184,550

  • 32%: $184,551–$239,200

  • 35%: $239,201–$616,300

  • 37%: Over $616,300

Married Filing Jointly

  • 10%: $0–$23,850

  • 12%: $23,851–$92,000

  • 22%: $92,001–$199,050

  • 24%: $199,051–$369,100

  • 32%: $369,101–$478,400

  • 35%: $478,401–$743,800

  • 37%: Over $743,800

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✅ 4. New OB3 Act Deduction for Tips (Starts 2025)

Employees who receive tips (servers, bartenders, hospitality workers) may deduct a portion of reported tips starting in 2025.

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  • IRS will issue additional guidance

  • Deduction applies only to tips that are officially reported

  • Beneficial for workers whose primary income is gratuity-based

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✅ 5. New OB3 Act Overtime Deduction (Starts 2025)

W-2 employees who work overtime may deduct up to:

✔ $2,500 of qualifying overtime pay each year

This provides tax relief for hourly workers who pick up additional hours.

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✅ 6. 2025 Retirement Contribution Limits

401(k), 403(b), 457 Plans

  • Employee contribution: $23,500

  • Catch-up (50+): $7,500

Traditional & Roth IRA

  • Contribution limit: $7,000

  • Catch-up (50+): $1,000

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Health Savings Accounts (HSA)

  • Individual: $4,300

  • Family: $8,550

  • Catch-up (55+): $1,000

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✅ 7. Child Tax Credit (CTC)

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  • Up to $2,000 per child under 17

  • Refundable up to $1,700, depending on income

(Congress may still enact expansions.)

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✅ 8. Clean Vehicle (EV) Tax Credits

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Credits continue in 2025, but eligibility remains strict:

  • New Clean Vehicle Credit: Up to $7,500

  • Used Clean Vehicle Credit: Up to $4,000

  • Must meet battery, sourcing, MSRP, and income rules

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✅ 9. Energy-Efficient Home Improvement Credits

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Taxpayers can claim:

  • 30% of qualified improvements

  • Annual cap: $1,200

  • Heat pumps: Additional $2,000

  • Solar: 30% Residential Clean Energy Credit

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✅ 10. ACA Premium Tax Credits Extended Through 2025

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Enhanced subsidies for Marketplace health insurance remain available.

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✅ 11. Estate & Gift Tax

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  • Lifetime exemption (2025): $13.61 million per individual

  • Annual gift exclusion: $18,000 per recipient

⚠️ The exemption is scheduled to cut roughly in half in 2026.

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✅ 12. Cryptocurrency Reporting Expansion

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Starting in 2025:

  • Brokers will issue Form 1099-DA

  • Increased IRS visibility into digital asset sales

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✅ 13. Business Tax Updates for 2025

Section 179 Expensing

  • Deduct up to $1,230,000

  • Phase-out begins at $3,050,000

Bonus Depreciation

  • 20% for 2025 (continues to phase out)

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🚨 Major OB3 Act Changes Coming in 2026 (Plan Now During 2025)

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These take effect next year but matter for 2025 planning.

✔ New $1,000–$2,000 Non-Itemizer Charitable Deduction

Starting 2026, taxpayers can deduct certain cash donations even without itemizing.

✔ 0.5% AGI Floor on Itemized Charitable Deductions

Itemized donations must exceed 0.5% of AGI to count (2026+).

✔ New 35%-Value Cap on Itemized Deductions for High Earners

High-income taxpayers can only reduce tax at a 35% benefit rate.

✔ Corporate 1% Charitable Deduction Floor

Applies to C-corp donations starting in 2026.

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✔ Other structural changes to itemized deductions

Including replacement of the Pease limitation.

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📞 Need Help Planning for 2025 & Preparing for 2026?

These changes may impact your strategy for deductions, retirement planning, charitable giving, Roth conversions, EV purchases, and more.

Rollmann Tax & Accounting Services

Patrick W. Rollmann, EA


📍 12381 S. Cleveland Ave., Suite 203, Fort Myers, FL


📞 239-291-9191


📧 patrick@rollmanntax.com

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