Let’s talk about something that affects all of us – tax changes for 2025. We know tax talk can make your eyes glaze over, but these updates could put more money in your pocket. Let’s break this down together in plain English.
What's Getting Better in 2025
More Money in Your Pocket: Standard Deductions
Here’s something to smile about – higher standard deductions! Let’s break down what this means for you:
- If you’re married filing jointly: You’ll get a $30,000 standard deduction (up $800 from 2024)
- If you’re a single parent (head of household): Your deduction will be $22,500 (up $600)
- If you’re single or married filing separately: You’ll get $15,000 (up $400)
What does this mean in real terms? More of your income is protected from taxes before you start paying. It’s like getting a bigger shield for your hard-earned money.
Good News for Families: Earned Income Tax Credit
If you have three or more children and qualify for the Earned Income Tax Credit, the maximum amount is increasing to $8,046 (up from $7,830 in 2024). This credit is especially valuable because it’s refundable – meaning you can receive it even if it’s more than the tax you owe.
Planning for the Future: Estate Tax Changes
For those thinking about long-term planning, the estate tax exclusion is increasing to $13.99 million (up from $13.61 million). While this might not affect everyone, it’s important for family business planning and generational wealth transfer.
Alternative Minimum Tax (AMT) Relief
The AMT exemption is increasing too. In simple terms, this means:
- Single filers: $88,100 exemption
- Married filing jointly: $137,000 exemption
These higher limits help protect more of your income from this alternative tax calculation.
What's Staying the Same
Let’s be clear about what isn’t changing, so you can plan accordingly:
Child Tax Credit
- Still $2,000 per qualifying child
- Up to $1,700 can be refundable
- This hasn’t changed, but it’s still a significant benefit for families
Personal Exemptions
- These remain at $0
- This isn’t new – it’s been this way since the Tax Cuts and Jobs Act of 2017
What This Means for Your Business
Planning Opportunities
- Review your tax withholding early in 2025
- Consider if the higher standard deduction affects your charitable giving strategy
- Look at timing of income and expenses around year-end
- Think about family tax planning with the unchanged child tax credit
Smart Moves to Consider
Think about:
- Timing major purchases or investments
- Planning your charitable giving
- Reviewing your business structure
- Updating your tax planning strategy
We're Here to Help
Remember, you don’t have to figure this out alone. We’re here to help you make the most of them. Whether you need help understanding how these changes affect your specific situation or want to create a tax strategy that works for your business, we’re just a conversation away.
Looking for personalized guidance on how these changes affect your business? Let’s talk about creating a tax strategy that works for your unique situation.
