Confirmed IRS Changes for 2025

• • Moving from 24% to 32% bracket:
    • Single: $197,300
    • Married filing jointly: $394,600
  • Individuals over 65 or legally blind:
    • $2,000 (Single)
    • $1,600 (Joint)
• Dependents may deduct the greater of $1,350 or $450 + earned income.
  

  Capital Gains in 2025

  Long-term capital gains enjoy their own set of tax brackets, which have also increased:
  • • 0% Rate: Up to $96,700 for married couples filing tax jointly.
    • These gains apply to assets held longer than a year and could result in significant tax savings for lower-income investors.

  Alternative Minimum Tax (AMT) Updates

  Designed to prevent high-income earners from avoiding taxes via deductions, the AMT exemptions for 2025 are:
  • Individuals: $88,100
  • Married Filing Jointly: $137,300
  Phase-out thresholds:
  • • Single: $626,350
    • Joint: $1,252,700
    The exemption is reduced by 25 cents for every $1 of AMTI (Alternative Minimum Taxable Income) above the threshold.

    Retirement Contribution Limits for 2025

    Contribution limits have been adjusted to allow higher retirement savings.
    Traditional & Roth IRAs
    • Annual limit: $7,000
    • Catch-up (age 50+): $1,000
    401(k), 403(b), 457, and TSP
    • • Contribution limit: $23,500
      • Catch-up (age 50+): $7,500
      • Total max (50+): $31,000
    SIMPLE IRA
    • Contribution limit: $16,500
    • Catch-up (age 50+): $3,500
      • Exception (age 60–63): The catch-up increased to $5,250
      SEP IRA
      • • Max contribution: 25% of compensation or $70,000, whichever is lower.
        • Compensation limit for calculation: $350,000
      Note: Roth IRA income eligibility ranges (MAGI) have increased, offering expanded access.

      Child Tax Credit (CTC) for 2025

      • Maximum per qualifying child: $2,000
      • Refundable portion: $1,700
      (This portion adjusts with inflation, but the $2,000 cap remains unchanged.)

      Gift & Estate Tax Changes

      Increased thresholds allow greater tax-free transfers of wealth.
      Annual Gift Exclusion
      • Per person: $19,000 (up from $18,000)
      • To non-U.S. citizen spouses: $190,000
      Lifetime Estate & Gift Tax Exemption
      • • $13.99 million per person
      (Up from $13.6 million in 2024)

      What Stays the Same in 2025

      Some provisions remain unchanged, mainly due to TCJA rules:
      • Personal Exemptions: Still eliminated (remains at $0)
      • Itemized Deduction Limits: No caps continue
      • Lifetime Learning Credit Phase-Out:
        MAGI thresholds remain static at:
        • $80,000 (individual)
        • $160,000 (joint)

      Potential 2026 Changes: What May Be Coming

      Many of the TCJA provisions are set to expire at the end of 2025 unless Congress intervenes. Here’s what could change:
      • • Standard deduction amounts may shrink
        • Individual tax rates may rise
        • SALT (state and local tax) deduction caps may disappear
        • Estate tax exemption could reduce significantly
        • Deductions for pass-through business income may be rolled back
      These changes could dramatically impact high earners, small business owners, and estate planners. The political landscape post-2024 election will largely determine what stays and what goes.

      What You Can Do Now: Smart Planning Tips

      1. 1. Review your tax bracket: With inflation adjustments, you might drop into a lower bracket—consider timing income or deductions accordingly.
         2. Maximize your retirement contributions: Seize the advantage of higher limits to lessen taxable income.
         3. Plan for estate transfers: Use the elevated lifetime exemption before a potential reduction in 2026.
         4. Track TCJA sunsets: Watch for legislative updates that may impact your deductions and credits next year.
         5. Work with a tax advisor: Professional guidance can help you prepare for worst-case scenarios and identify overlooked strategies.

      Summary Table: 2025 Highlights

      Category	2025 Change
      Income Tax Brackets	Adjusted upward ~2.8%
      Standard Deduction	$15,000 (Single), $30,000 (Joint)
      Long-term Capital Gains Threshold	0% up to $96,700 (Joint)
      AMT Exemption	$88,100 (Single), $137,300 (Joint)
      IRA Contribution	$7,000 + $1,000 (catch-up)
      401(k) Contribution	$23,500 + $7,500 (catch-up)
      SIMPLE IRA	$16,500 + up to $5,250 (catch-up 60–63)
      Child Tax Credit	$2,000 total, $1,700 refundable
      Gift Tax Exclusion	$19,000 per person
      Estate Tax Exemption	$13.99 million per individual

       

      Final Thoughts

      The 2025 tax year represents both opportunity and uncertainty. With the clock ticking on several major TCJA provisions, proactive tax planning is more important than ever. Whether you’re saving for retirement, gifting wealth, or managing business income, staying informed is essential.
      Consider meeting with a financial advisor or tax expert to ensure your strategy aligns with today’s rules—and tomorrow’s possibilities.