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.
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.
