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UPDATES from the One Big Beautiful Bill and other TAX INFORMATION:
Trump Accounts: These are available for all US children under 18. Up to $5,000 per year may be contributed per year by family, friends, and employers. For children born between January 1, 2025 - December 31, 2028 $1,000 from the US government will fund the account automatically once created. More info here: https://trumpaccounts.gov/
Reverted 1099-K Threshold: The lower $600 1099-K reporting threshold for third party payment organizations has been repealed. For the 2025 tax year, you will only receive a 1099-K if gross payments exceed $20,000 and there are more than 200 transactions. This does not affect the reporting of income however. If you received income from eBay or similar sites, you are still required to report this on your return whether you receive 1099-K or not.
Additional Deduction for seniors (Age 65+) — Taxpayers 65 and older can claim a new $6,000 deduction (in addition to the regular additional standard deduction for seniors). This reduces taxable income significantly for many retirees, including those on fixed incomes or Social Security.
No Tax on Tips (Temporary) — Qualified tips received in customary tipping occupations are fully deductible (up to certain limits) for 2025–2028.
No Tax on Overtime (Temporary) — The premium portion of overtime pay (e.g., the "half" in time-and-a-half) is deductible for 2025–2028.
No Tax on Car Loan Interest (Temporary) — Interest paid on loans for qualified personal vehicles (with U.S. final assembly) is deductible up to $10,000 annually for 2025–2028 (phases out at higher incomes).
Paper Refund Checks phased out — In order to combat fraud and prevent stolen or lost checks, the IRS has begun the process to fully transition to electronic payments. This will allow fast delivery for refunds of less than 21 days in most cases.
Child Tax Credit: This credit rises to $2,200 credit per dependent under 17. The credit is partially refundable up to $1,700. The income thresholds are $400,000 for married filing joint and $200,000 for all other filers.
Clean Vehicle (EV) Tax Credit: (available only for vehicles acquired on or before September 30, 2025).Up to $7,500 tax credit for buyers of eligible new electric vehicles. Final assembly must have occurred in North America. Sedans must have retail price below $55,000 and SUV’s, trucks, and vans must be under $80,000. Income ceilings are $150,000 for single filers, $225,000 for HOH, and $300,000 for married filing joint.
Residential Clean Energy Credit: This credit has been extended through 2034 and currently allows a credit of 30% of the cost for qualifying new solar, wind, geothermal, or biomass and fuel cell installations.
American Opportunity Tax Credit (AOTC): Can be claimed for students seeking a degree in the first 4 years of college. Can claim up to $2,500 per student in qualified education expenses. If tax has been reduced to zero, up to $1,000 of this credit can be refundable.
Lifetime Learning Credit (LLC): This credit is not refundable but allows up to $2,000 in qualified education expenses per return. Can be taken with the AOTC, but not for the same student.
Deduction for Medical and Dental Expenses: Under the Consolidated Appropriations Act the deduction floor has moved permanently to 7.5%. This means if the taxpayer itemizes, that he or she can deduct the expenses, which exceed 7.5% of adjusted gross income (AGI).
Standard Mileage Rates in 2025:
70 cents per mile for business
21 cents per mile for medical travel
14 cents for charitable service
Required Minimum Distributions (RMD’s): The SECURE Act 2.0 increased the age for required RMD’s to age 73.
Qualified Charitable Contribution (QCD): This is an option for taxpayers who are required to take annual RMD’s. They may donate up to $108,000 to charity directly from their IRA instead of taking the RMD. The donated amount is not included in taxable income.
Annual Gift Tax Exclusion for 2025 is $19,000, and for 2026 it is $20,000.
IRA Annual Contribution Limit for 2025 is $7,000, and $8,000 for those over 50.
Student Loan Forgiveness: If your student loan was forgiven, there will be no tax on any loans forgiven through the end of 2025. Some states may differ with federal law and will tax the forgiven loan.
Home Office Deduction: If you run a Schedule C business from home or work from a home office, you might be eligible for a deduction. It will be based off of the percentage of your home that is used exclusively for business purposes.
Health Savings Account (HSA) Contributions: These contributions are tax-deductible, the earning also grow tax-free, and withdrawals for qualified medical expenses are also tax-free. You can contribute to an HSA up to the tax-filing deadline.
Student Loan Interest Deduction can be taken on any qualified education loan with a $2,500 maximum deduction regardless of the number of students in the family. Only the individual who is legally required to make interest payments under the loan terms may claim the deduction. So if only the student signs the loan, the parent can’t deduct the interest.
Unemployment Compensation: Remember that unemployment compensation is generally taxable.
Foreign Earned Income Exclusion: For U.S. citizens or resident aliens living abroad, the Foreign Earned Income Exclusion allows you to exclude a certain amount of your foreign earnings from U.S. income tax. For the 2025 tax year, this exclusion is set to increase to $130,000.
Your Current Address With The IRS: It is the taxpayer’s responsibility to notify the IRS when their address changes. When you file your next return, the IRS routinely modifies the address on their records but in the meantime whenever the taxpayer has a change of address it is important to file a Form 8822 to make that change. This should be done so you don’t miss any mailings from the IRS.