10/26/2025
Recent federal tax law changes for 2025 include making permanent most of the 2017 Tax Cuts and Jobs Act (TCJA) provisions and establishing new, temporary tax deductions. Many amounts are also being adjusted for inflation.
Key changes under the "One Big Beautiful Bill"
The "One Big Beautiful Bill" of 2025 made several notable changes that impact the 2025 tax year.
Permanent TCJA extensions: Many expiring provisions of the TCJA were made permanent, including the current seven tax brackets and lower individual income tax rates.
New temporary deductions:
Overtime pay: A deduction of up to $12,500 ($25,000 for joint filers) is available for qualified overtime pay. This is temporary for tax years 2025 through 2028 and phases out at higher incomes.
Tips: A deduction of up to $25,000 is available for qualified tips. This is temporary for tax years 2025 through 2028 and also phases out at higher incomes.
Auto loan interest: Taxpayers can deduct up to $10,000 in interest on personal vehicle loans for vehicles assembled in the U.S. This is temporary for tax years 2025 through 2028 and also has income limitations.
New bonus senior deduction: An additional $6,000 deduction is available for individuals aged 65 and older ($12,000 for married couples if both qualify) for tax years 2025 through 2028. It is subject to modified adjusted gross income (MAGI) phase-outs.
Child Tax Credit increase: The maximum Child Tax Credit is permanently increased to $2,200 per child for 2025, and it will be adjusted annually for inflation.
Electric Vehicle (EV) credit ends: The Clean Vehicle tax credit ends for new EVs purchased after September 30, 2025.
Adjusted limits for 2025 (adjusted for inflation)
Several tax-related limits for the 2025 tax year, which are typically filed in 2026, have been adjusted for inflation.
Income tax brackets
The income thresholds for the seven federal tax brackets have been updated. You can find detailed tables for each filing status in the referenced documents.
Standard deduction
The standard deduction amounts have increased for all filing statuses for the 2025 tax year. You can find the specific amounts for single, married filing jointly, and head of household filers in the referenced document. An additional deduction is available for those 65 or older or blind.
Capital gains taxes
Income thresholds for long-term capital gains tax rates (0%, 15%, and 20%) have been adjusted for inflation. Specific thresholds for different filing statuses are available in the referenced document.
Retirement contributions
Contribution limits for some retirement accounts have also been updated. The 401(k) limit increases to $23,500, while the traditional IRA and IRA catch-up contributions remain at $7,000 and $1,000, respectively. HSA limits are $4,300 for self-only and $8,550 for family coverage.
