Standard Deduction Increase:

• The Standard Deduction has increased by 5% for 2025:
  • Single Filers: $14,600
  • Married Filing Jointly: $29,200
  • Head of Household: $21,900
• This adjustment aims to keep pace with inflation, potentially reducing taxable income for many taxpayers.
  Barron’s

Tax Bracket Adjustments:

• The IRS has adjusted tax brackets to account for inflation, affecting the rates at which income is taxed.
• These changes may impact the amount of tax owed, depending on your income level.

Retirement Contribution Limits:

• Contribution limits for retirement accounts like 401(k)s and IRAs have been increased, allowing taxpayers to save more for retirement on a tax-deferred basis.

Health Savings Account (HSA) Limits:

• The annual contribution limits for HSAs have been raised, enabling individuals with high-deductible health plans to save more pre-tax dollars for medical expenses.

Earned Income Tax Credit (EITC) Expansion:

• The EITC has been expanded to provide greater benefits to low- and moderate-income working individuals and families.

Child Tax Credit (CTC) Adjustments:

• The CTC has been adjusted, potentially increasing the credit amount or modifying eligibility criteria.

Capital Gains Tax Rates:

• Changes have been made to capital gains tax rates, which may affect the taxation of investment income.

Tax Credits for Energy-Efficient Home Improvements:

• New tax credits are available for taxpayers who make energy-efficient improvements to their homes, such as installing solar panels or energy-efficient windows.

Student Loan Interest Deduction:

• The deduction for student loan interest has been modified, potentially affecting the amount of interest that can be deducted from taxable income.

State and Local Tax (SALT) Deduction Cap:

• The cap on the SALT deduction has been adjusted, impacting taxpayers who itemize deductions and pay significant state and local taxes.