Tax Year 2025 Filing Review
By: Tax Hotline
Winter 2026 (Vol. 43, No. 4)
The One Big Beautiful Bill legislation made many 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent (preventing their expiration after 2025) and added new temporary breaks for 2025. When filing your 2025 federal income taxes, here are several key changes to keep in mind:
Higher Standard Deduction
| Filing Status | HSD |
|---|---|
| Single or Married Filing Separately: | $15,750 |
| Married Filing Jointly or Qualifying Surviving Spouse: | $31,500 |
| Head of Household: | $23,625 |
If you’re 65 or older (or blind), you get an additional standard deduction (around $2,000 single/HOH or $1,600 per qualifying spouse on joint returns), plus a new temporary $6,000 “bonus” deduction for seniors (through 2028). This means if you are single your standard deduction would be $23,750 and if married filing jointly with both are age 65 or older, your standard deduction together is: $46,700.
The new $6,000 extra for over 65 is subject to a Modified Adjusted Income (MAGI) phaseout and is completely eliminated for MAGI over $175,000 for single filers and at $250,000 MAGI for those married filing jointly. NOTE: Eligible taxpayers can claim the extra $6,000 even if they itemize, whereas the existing standard over 65 bonus is only available if you take the standard deduction.
Tax Brackets and Rates Remain the Same (Lower Rates Made Permanent)
The seven federal income tax rates stay at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The TCJA’s lower rates and structure are now permanent, so no jump back to pre-2018 higher rates.
New Temporary Deductions and Exclusions for 2025
Several new provisions apply to 2025 (often temporary through 2028 unless extended):
- Tips up to $25,000 can be excluded from federal income tax, subject to income limits and specific eligibility requirements. Use schedule 1-A to claim.
- Overtime pay up to $12,500 (or $25,000 for joint filers) can be excluded from income but also subject to income phaseouts.
- New child savings accounts (called Trump accounts) start with a $1,000 federal deposit for kids born in 2025–2028 and allow further yearly contributions subject to limits and rules. File Form 4547 with your 2025 tax return to enroll.
- Deduction for car loan interest. Up to $10,000 of interest on loans for new U.S. assembled vehicles (phases out at higher incomes, e.g., over $100,000 single / $200,000 joint).
- Increased Child Tax Credit. Boosted amount (e.g., higher maximum, possibly $200 more per child in some references).
- The SALT deduction cap increased (to $40,000 for some taxpayers through 2029), which helps if you itemize in high-tax states
- Personal exemptions remain $0 (eliminated under TCJA).
Be sure to gather records for the new deductions (car loan interest, tip and overtime income) This year many may see larger refunds. The One Big Beautiful Bill (OBBB) cuts applied to 2025, but withholding tables weren’t adjusted mid-year, so many over-withheld during 2025 and will get it back.
Key Changes For the 2026 Tax Year
Here’s a sampling of some significant tax law changes going into effect this year:
- Even if you take the standard deduction, you can take the new charitable contribution deduction for non-itemizers for cash contributions up to $1,000 ($2,000 for married couples filing jointly).
- For those who do itemize, there is a new 0.5% of adjusted gross income floor on charitable deductions for itemizers. This means only the excess over that amount is deductible.
- New 35% benefit limit on itemized deductions for taxpayers in the 37% tax bracket.
- Reduced income thresholds at which the alternative minimum tax exemption begins to phase out.
- New tax-advantaged Trump accounts kick off in July 2026. You can enroll by filing Form 4547 with your 2025 tax return or register at TrumpAccounts.gov when it goes live in mid-2026.
- Increase in tax-free 529 plan withdrawal limit for qualified elementary and secondary school expenses to $20,000 (from $10,000 for 2025)
- New requirement that higher-income taxpayers’ catch-up contributions to employer-sponsored retirement plans must be treated as post-tax Roth contributions.
- Elimination of certain energy-efficiency credits for homeowners.
- Wider income ranges over which the Section 199A qualified business income (QBI) deduction limitations phase in, potentially allowing larger deductions for some pass-through entity owners.
- New minimum QBI deduction of $400 for taxpayers who materially participate in an active trade or business if they have at least $1,000 of QBI from it.
Q: Who needs to file a return for the 2025 tax year?
A: For the 2025 tax year (returns filed in 2026), most U.S. citizens and resident aliens must file a federal income tax return if their gross income meets or exceeds certain thresholds. These are based on your filing status, age at the end of 2025, and whether you’re claimed as a dependent on someone else’s return. The Key Filing Thresholds are based on your gross income which includes wages, tips, interest, dividends, business income, etc. (excluding certain nontaxable items).
If under age 65 at the end of 2025:
| Filing Status | Gross Income Threshold (At Least This Amount) |
|---|---|
| Single: | $15,750 |
| Head of Household: | $23,625 |
| Married Filing Jointly: | $31,500 (both spouses under 65) |
| Married Filing Jointly: | $33,100 (one spouse under 65) |
| Married Filing Separately: | $15,750 |
| Qualifying Surviving Spouse: | $31,500 |
If age 65 or older at the end of 2025:
| Filing Status | Gross Income Threshold (At Least This Amount) |
|---|---|
| Single: | $17,550 |
| Head of Household: | $25,625 |
| Married Filing Jointly: | $33,100 (one spouse 65+) |
| Married Filing Jointly: | $34,700 (both spouses 65+) |
*Additional for blindness: If blind (or spouse blind), add another ~$2,000 (single/HoH) or ~$1,600 per qualifying person (joint) to the standard deduction, which raises the filing threshold accordingly.
*Dependents: If someone can claim you as a dependent, the thresholds are much lower (often $1,350+ of unearned income, or earned income over ~$15,750, or gross income over the standard deduction amount minus $450—check IRS Pub 501 for exacts).
You Must Also File If Any of These Apply:
(Even If Income Is Below Thresholds)
- You owe special taxes (e.g., self-employment tax of $400+, household employment taxes, alternative minimum tax, or additional Medicare tax).
- You had wages from which federal income tax was withheld (to get a refund).
- You’re claiming refundable credits like the Earned Income Tax Credit (EITC), Additional Child Tax Credit, or recovery rebates.
- You received advance payments of premium tax credit or need to repay excess.
- You had net earnings from self-employment of $400 or more.
- You’re claiming certain other situations (e.g., church employee income over $108.28, or certain scholarship/fellowship income).
Even If Not Required, You Should File If...
- Federal tax was withheld from your pay (to claim a refund—many get money back).
- You’re eligible for refundable credits (e.g., EITC, Child Tax Credit).
- You want to start the clock on the statute of limitations or carry over losses.