Smart tax planning starts with understanding new tax regulations. The 2025 tax year brings a series of important updates that affect individuals, families, and small business owners alike. From expanded deductions to new and adjusted tax credits, this filing season reflects some of the most significant changes introduced under the One Big Beautiful Bill Act (OBBBA).
Here’s your complete guide to the most notable 2025 tax filing changes, including updates to credits, deductions, and IRS policies—plus what you can do now to prepare.
The tax landscape has shifted considerably in recent years, and this trend continues in 2025. The One Big Beautiful Bill Act permanently extended several provisions that were originally set to expire. It also introduced adjustments to income thresholds, retirement contribution limits, and electronic filing rules.
These updates aim to simplify compliance, promote savings, and expand access to key tax benefits. But they also mean it’s more important than ever to review your situation before the 2025 tax filing deadline on April 15, 2026.
Many of the Tax Cuts and Jobs Act (TCJA) provisions are now made permanent under OBBBA, including expanded standard deductions and lower marginal tax rates. The legislation also made certain small business deductions and credits more flexible for pass-through entities.
While the seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) remain in place, inflation adjustments increase tax bracket thresholds. These increases mean you can earn more money before being pushed into a higher tax bracket.
Here is a look at the new income thresholds for 2025:
| Tax Rate | Single Filers | Married Filing Jointly | Head of Household |
| 10% | $0 to $11,950 | $0 to $23,900 | $0 to $17,050 |
| 12% | $11,951 to $48,725 | $23,901 to $97,450 | $17,051 to $65,300 |
| 22% | $48,726 to $104,825 | $97,451 to $209,650 | $65,301 to $104,800 |
| 24% | $104,826 to $197,950 | $209,651 to $395,900 | $104,801 to $197,950 |
| 32% | $197,951 to $251,050 | $395,901 to $502,100 | $197,951 to $251,050 |
| 35% | $251,051 to $627,600 | $502,101 to $753,100 | $251,051 to $627,600 |
| 37% | $627,601+ | $753,101+ | $627,601+ |
For example, a single filer will now move from the 24% to the 32% bracket once their taxable income exceeds $197,950, a higher threshold than in the previous year.
The standard deduction has also increased, allowing taxpayers to reduce their taxable income by a larger amount without itemizing.
Tax credits directly reduce what you owe dollar-for-dollar, making them a valuable tool in your financial strategy. Here are the most significant updates for 2025.
The Child Tax Credit remains a top benefit for families, now adjusted for inflation and expanded eligibility. For 2025:
Changes may also affect dependent qualifications. Make sure you carefully review dependency rules.
The EITC provides relief for low- to moderate-income workers. Inflation-adjusted thresholds help expand eligibility to more families:
The OBBBA eliminates or reduces many energy-efficiency credits in 2025. To claim these, qualifying purchases must be made before accelerated deadlines:
Visit the IRS website for complete eligibility and income limit details.
Both the American Opportunity Credit and Lifetime Learning Credit remain available, with modest increases in income phase-outs. Qualifying expenses include tuition, fees, and required materials for higher education programs.
Key Insight: Only one education credit can be claimed per student each year.
The Act introduces or extends several smaller credits, including:
Deductions reduce the amount of your income that’s subject to tax. The following 2025 updates could bring bigger savings at filing time.
One of the most in-demand changes of 2025 is the increase in the State and Local Tax (SALT) deduction cap. The SALT deduction cap has been raised from $10,000 to $40,000 for taxpayers with income up to $500,000. This provides substantial relief for those in high-tax states.
The OBBB introduces a new (temporary) bonus “senior deduction” for taxpayers aged 65 or older, available from 2025 through 2028. It can be claimed in addition to the standard deduction.
For Example:
The IRS increased contribution limits for retirement accounts:
Enhanced Catch-Up Contributions are available for 401(k) plans ($11,250) and SIMPLE plans ($5,250), per the SECURE 2.0 Act.
Small business owners also benefit from several key changes in 2025:
Charitable contributions remain deductible up to 60% of AGI for cash donations. While the Medical expense deduction threshold remains 7.5% of your AGI. This deduction is especially helpful for families with high healthcare costs.
Several new temporary deductions have also been introduced:
Visit the One, Big, Beautiful Bill provisions page on the IRS website for full details on credit and deduction requirements.
Beyond brackets, credits, and deductions, several other updates will affect the 2025 tax season.
A proactive approach can help you avoid mistakes, last-minute stress, and uncover savings opportunities:
1. Review Your Withholding: Use the new tax brackets to check your W-2 and 1099 withholding. Adjusting it now can help you avoid a large bill or an unexpectedly small refund later.
2. Gather All Your Documents: Keep detailed records for any expenses related to the new deductions, such as auto loan interest or overtime hours. Proper documentation is essential to substantiate your claims.
3. Track Charitable Contributions and Retirement Deposits: Maintain a running record of your donations and retirement contributions throughout the year. Doing so ensures you capture every eligible deduction and maximize your year-end savings.
4. Consult a Professional Early: Don’t wait until the filing deadline. Consulting a CPA or tax professional now can help you identify personalized strategies based on your income, investments, and filing status to optimize your 2025 return.
The 2025 tax season brings a mix of new opportunities and updated rules designed to simplify filing and encourage financial growth. From expanded credits to higher deductions, understanding these changes can help you maximize every dollar.
For personalized guidance and a proactive tax strategy, connect with an LTax team member today, and take advantage of 2025 tax changes.
LEGAL OR TAX: The information herein is not legal, such as trust or estate planning, advice, or tax advice. Any such information is provided for illustrative purposes only and must not be relied upon without the benefit of the advice of your lawyer and/or tax professional. Lido specifically disclaims any liability from any reliance on such information. Lido is not a legal service provider or tax professional and does not offer legal or tax advice. Should you desire to obtain tax or legal services or advice, you must enter into your own, independent engagement agreement with a licensed attorney or tax professional.