Big BIG BIG Changes for Today and Beyond!

As the holiday festivities ramp up, it’s time to look ahead—because tax season is almost here, and this year brings some of the biggest shifts we've seen in a long time. Thanks to the One Big Beautiful Bill Act, significant tax law changes are arriving for tax year 2025 and beyond, impacting deductions, credits, and overall tax planning strategies.

Let’s break down the key updates that will shape your tax return this year and, in the years, ahead:

These changes will apply in 2025.

Higher Standard Deduction

For 2025, the standard deduction rises significantly:

• Single: $15,750

• Head of Household: $23,625

• Married Filing Jointly: $31,500

If you’ve previously itemized, it’s time to reevaluate which approach saves you more—these increases could tip the scales toward the standard deduction for many taxpayers.

SALT Cap Increases to $40,000

The State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000, providing additional relief for taxpayers in high-tax states. However, high-income filers may see the deduction reduced by income-based phase-outs.

Child Tax Credit Increases

The credit rises to $2,200 per qualifying child under age 17 beginning in 2025.

Enhancement of Adoption Credit

This makes the adoption tax credit partially refundable up to $5,000 (indexed for inflation) beginning in taxable years starting after Dec. 31, 2024. Amounts carried forward are not eligible for inclusion when determining the refundable portion of the credit in subsequent years.

• Tips and OT Deduction:  

Up to $25,000 for qualified tips. Employees and self-employed individuals may deduct qualified tips received in occupations listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported. Deduction is available for both itemizing and non-itemizing taxpayers.

For a limited time, taxpayers will have several new deductions they may be able to claim:

Up to $12,500 for qualified overtime compensation. Individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act (FLSA) and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual. Deduction is available for both itemizing and non-itemizing taxpayers.

• Auto Loan interest Deduction:

Deduct up to $10,000 per year in interest paid on loans for U.S.-assembled personal vehicles (purchased, not leased). You’ll need the vehicle identification number (VIN) to qualify.

• Senior Deduction:

Up to $6,000 per taxpayer age 65+. Taxpayers aged 65 and older can claim an additional $6,000 deduction, on top of the existing standard deduction for seniors (subject to income limits).

Then in 2026 there will be the return and enhancement of the above line cash donation deduction previously allowed in tax years 2020 and 2021.

 Above the line Charitable Cash Donation -A deduction will be available to non-itemizers for charitable contributions made in cash to a qualified charitable organization (which excludes DAFs). The maximum deduction allowed is $1,000 ($2,000 for joint filers).

The 2025 and 2026 tax years promise higher standard deductions, new opportunities for deductions, and expanded credits—all while keeping some familiar rules in place. Whether you come out ahead depends on your unique situation: your income, filing status, and financial choices throughout the year.

The bottom line? It’s never too early to start planning for tax season and the years that follow—these changes make it more important than ever to stay informed and proactive!