What’s New for 2025?

Posted: November 6, 2025 | Hacker Nelson

 

As part of the One Big Beautiful Bill passed in 2025, there are several items to note for taxpayers filing for the 2025 tax year. A summary of what we felt the most notable changes are is below. If you are wondering how these changes might impact you, please feel free to reach out. 

What’s New for 2025? – Individuals
Change Details
Lower tax rates made permanent Tax Cuts and Jobs Act (TCJA) individual tax rates and expanded brackets are permanent, keeping the top rate at 37%.
Higher standard deduction Permanently increased to the higher TCJA levels – $31,500 MFJ, $23,625 HOH, and $15,750 single/MFS, indexed annually for inflation.
Personal Exemptions Repealed Permanently repealed (This has been eliminated since 2017 as part of the TCJA).
Senior Deduction Additional deduction of $6,000 for those 65+, subject to income limits.
Higher SALT Deduction Cap You can now deduct up to $40,000 of state and local taxes (an itemized deduction).
Itemized Deductions Simplified The old Pease limitation is gone, replaced with a 2% reduction for high income taxpayers.
Enhanced Child Tax Credit The CTC is increased and made permanent, as is the credit for other dependents.
QBI Deduction The Qualified Business Income (QBI) deduction is made permanent with higher income limits before phase outs.
No Tax on Tips and Overtime Up to $25,000 of tips and $12,500 ($25,000 MFJ) of overtime pay can be deducted, subject to income and job limitations.
New Car Loan Interest Deduction Deduct up to $10,000 per year in interest on US-assembled personal-use cars, subject to income limitations.
Expanded 529 Plan Uses 529 funds can now be used for career credentials, licenses, and apprenticeship programs.
AMT Relief The Alternative Minimum Tax exemption is permanently higher and adjusted for inflation.
Adoption Credit Now partially refundable.
Employer-Paid Student  Loan Help Will stay tax-free.
Tax-deferred investment accounts Children born between 2025-2028 are eligible for a $1,000 initial investment in a tax-deferred investment account.

 

Items to note for 2026
Change Details
Higher 1099 Reporting Thresholds Starting in 2026, payers will need to issue a 1099-NEC or 1099-MISC when payments are $2,000 or more (previously $600).
Energy Credits Sunsetting Home energy improvement and clean energy tax credits will expire after 2025.

 

What’s new for 2025? Businesses
Change Details
QBI Deduction The 20% business income deduction stays in place permanently, with a minimum $400 deduction for higher income limits, and expanded phase-in ranges.
Bonus Depreciation 100% bonus depreciation is back for assets placed in service after January 19, 2025.
Section 179 expensing Limits rise to $2.5 million, with higher phase-out thresholds—both indexed for inflation.
Business Interest Deduction The limitation returns to the more favorable EBITDA-based standard permanently, making it easier to deduct business interest.
Executive Compensation Deduction Rules Tightened The $1 million deduction cap for executive pay now applies to all members of controlled and affiliated service groups, broadening who’s affected.
Enhanced Employer Credits Employers get an enhanced child care credit and paid family & medical leave credit.
Employer-paid student loan assistance exclusion made permanent Benefit allowing employers to help pay employees’ loans tax-free is now permanent and indexed for inflation.
Employee Retention Credit (ERTC) Stricter enforcement and penalties are introduced for improper ERTC claims.
Energy and Clean Vehicle Credits Several clean vehicle and energy credits are terminated for property or vehicles placed in service after specified 2025/2026 dates