07/07/2025
📌 New 2025 Tax Law: 11 Big Changes That Could Save You Thousands 💸
Effective starting January 1, 2025 (file on your 2026 return)
1️⃣ Tax-Free Tips & Overtime — Up to $25,000 Tax-Free!
✅ Up to $12,500 (single) or $25,000 (married) in tips and overtime pay is excluded from taxable income.
📌 Example:
A restaurant worker earns $20,000 in tips and $5,000 in overtime.
→ If married, the entire $25,000 is tax-free.
→ If single, $12,500 is excluded, and the rest is taxed.
2️⃣ $6K Senior Deduction ($12K for couples)
✅ Anyone age 65 or older can deduct $6,000 — or $12,000 per couple — even if taking the standard deduction.
📌 Example:
A retired couple over 65 earning $42,000 in pension income can reduce taxable income by $12,000 on top of the standard deduction, likely paying no tax.
3️⃣ Deduct Car Loan Interest — Up to $10,000 for U.S.-Built Vehicles
✅ Up to $10,000 of personal-use car loan interest is deductible, but only for U.S.-assembled vehicles.
📌 Example:
You finance a new Ford Explorer and pay $4,800 in interest in 2025.
→ You can deduct the full $4,800 if your income is under $100K ($200K joint).
4️⃣ $2,200 Child Tax Credit
✅ Credit is $2,200 per child for tax years beginning after Dec. 31, 2024.
✅ Refundable portion remains $1,600 per child.
✅ Indexed for inflation starting 2025 (rounded to the nearest $100).
📌 Example:
A family with 3 children qualifies for:
$2,200 × 3 = $6,600 total credit
If they owe no tax, they still receive $4,800 refundable (3 × $1,600)
The remaining $1,800 offsets any tax owed07032025-Legis-language….
5️⃣ 23% Deduction for Small Biz (QBI)
✅ The Qualified Business Income deduction rises from 20% to 23%.
📌 Example:
You run a sole proprietorship with $100,000 in net income.
→ You now deduct $23,000 instead of $20,000, reducing taxable income to $77,000.
6️⃣ Estate Tax Exemption Raised — Up to $30M Tax-Free
✅ The estate and gift tax exemption is doubled to $15M (individual) or $30M (married).
📌 Example:
You transfer $5 million in property to your children — no estate tax applies under the new exemption cap.
7️⃣ MAGA Accounts for Kids
✅ Parents can open Money Accounts for Growth and Advancement (MAGA accounts) — similar to 529s or Roth IRAs.
📌 Example:
You contribute $2,000/year for 18 years → the account grows tax-free, and your child can use it for college or a first home.
8️⃣ Expanded HSAs — Covers More, Even if Spouse Has an FSA
✅ You can now contribute to an HSA even if your spouse uses a Flexible Spending Account (FSA).
✅ More expenses are eligible — like OTC meds and menstrual care products.
📌 Example:
You put $3,850 in your HSA and use it to buy reading glasses, pain relievers, and insulin — all tax-free.
9️⃣ 100% Bonus Depreciation
✅ Businesses can fully deduct qualified assets in the first year, restoring the 100% bonus depreciation rule.
📌 Example:
A business buys $120,000 in equipment in 2025 → it can deduct all $120,000 that year instead of spreading it out.
🔟 Green Energy Credits Ending
❌ Tax credits for solar panels, electric vehicles, energy-efficient windows, etc., are phased out starting 2025.
📌 Example:
You install $20,000 in solar panels in 2026 — no more 30% federal tax credit unless installed before 2025 ends.
1️⃣1️⃣ Excise Taxes & Restrictions on Transfers + Medicare
✅ A new 5% excise tax on remittance transfers applies unless the sender is a verified U.S. citizen.
✅ Tighter Medicare eligibility rules for certain immigrants.
📌 Example:
You wire $1,000 to another country without U.S. ID verification → you pay a $50 federal excise tax.
Certain visa holders may no longer qualify for Medicare.
🗓️ All These Start in 2025!
Applies to income, deductions, and credits earned in 2025
You'll claim them when you file your return in 2026
Contact San Diego CPA at (858)246-6519 if you need assistance with Accounting, Tax and Audit.
