Congress passed a sweeping tax law in 2025 that locks in previous cuts, adds new deductions, expands credits, and repeals some green incentives. These changes affect both individuals and business owners, and some are already in effect or starting in 2026. Here's what you need to know — in plain language.

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For Individuals

Income Tax Rates
The current tax brackets (10% to 37%) are now permanent. You won’t see automatic tax increases in a few years like before.

Standard Deduction
In 2026, the standard deduction increases to $31,500 for married couples and $15,750 for singles. This reduces your taxable income without needing to itemize deductions.

Child Tax Credit (CTC) & Other Dependents
You’ll now receive $2,200 per child each year if they have a Social Security number. A $500 credit for other dependents (like elderly parents) is also locked in permanently.

SALT Deduction (State and Local Taxes)
You can now deduct up to $40,000 in state and local taxes through 2029. After that, it drops back down to $10,000 unless the law changes again.

Estate Tax Exemption
The estate tax exemption is now $15 million and will adjust with inflation. This means most families won’t owe federal estate taxes.

Pease Limitation Repealed
High earners will no longer see their deductions reduced just because they earn more. You get to keep 100% of your itemized deductions.

Alternative Minimum Tax (AMT)
Fewer people will owe this backup tax, thanks to higher exemption amounts. It still phases out quickly, but only for those with very high incomes.

Personal Exemptions & Senior Deduction
Personal exemptions are permanently gone, but taxpayers 65 and older can claim an extra $6,000 deduction through 2028.

Car Loan Interest Deduction
Between 2025 and 2028, you can deduct up to $10,000 in interest per year on personal-use car loans — but only for cars assembled in the U.S. Income limits apply.

Child and Dependent Care Credit
You can now claim up to 50% of eligible childcare costs as a credit. More middle- and upper-income families now qualify.

Education Credits & Scholarships
You can receive up to a $1,700 tax credit for donating to approved scholarship organizations. To claim college tax credits, your dependents must have valid Social Security numbers.

Premium Tax Credit Restrictions (Health Insurance)
Some immigrants will no longer qualify for health insurance subsidies. Also, there’s no longer a cap on how much you may have to repay if your income ends up higher than expected.

Mortgage Interest & Casualty Losses
You can deduct mortgage interest only on loans up to $750,000. Personal losses from property damage must now be tied to federally declared disasters to be deductible.

Trump Accounts for Kids
New accounts allow you to contribute $5,000 annually for kids under 18. If your child is born between 2025 and 2028, the government will deposit $1,000 at birth.

529 Education Plans Expanded
You can now use 529 plans for a wider range of educational expenses, including private school, trade school, and vocational programs. K–12 withdrawal limits increased to $20,000 per year.

Charitable Donations (Non-itemizers)
Even if you don’t itemize, you can deduct up to $2,000 in charitable contributions per year. This makes it easier for everyone to get a tax break for giving.

Tip Income Exclusion
Tips up to $25,000 per year are now completely tax-free between 2025 and 2028. This is a major benefit for restaurant and service workers.

Overtime Pay Exclusion
Overtime wages are tax-free up to $12,500 for individuals and $25,000 for married couples (2025–2028). This means extra work won’t push you into a higher tax bracket.

Gambling Loss Limitations
You can only deduct gambling losses up to 90% of your winnings. For example, if you win $10,000, you can only deduct $9,000 in losses.

1% Excise Tax on Foreign Remittances
If you send money abroad, you'll now pay a 1% tax on those transfers starting in 2026. This is paid by the sender, not the recipient.

ABLE Account Changes
Rollovers from 529 plans to ABLE accounts are now permanent. The saver's credit is also now permanently available for eligible ABLE account contributions.

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For Businesses

199A QBI Deduction Improvements
The 20% pass-through deduction is still in place — now with a $400 minimum. You need at least $1,000 in qualified business income, and the phaseouts now start at higher income levels ($75K single, $150K married).

Bonus Depreciation Made Permanent
You can deduct 100% of the cost of most assets in the year you buy them — permanently. This includes equipment, machinery, and even manufacturing-related real estate.

Section 179 Expensing Increases
Section 179 expensing limits jump to $2.5 million with a $4 million phaseout cap. This makes it easier for you to immediately deduct business investments.

Interest Deduction Coordination (ATI Changes)
The rules for business interest deductions have been clarified. You now must add back certain foreign-related income types, which could reduce your deduction.

Small Business Stock (QSBS) Exclusion
You can now exclude capital gains after just 3 years (down from 5) if you sell qualified small business stock. The gain limit increased from $10 million to $15 million, indexed for inflation.

1099-MISC & 1099-NEC Threshold Increase
You don’t have to issue a 1099 unless you pay someone more than $2,000 a year (previously $600). This reduces paperwork for smaller vendors and contractors.

1099-K Reporting Rolled Back
Platforms like PayPal, Venmo, and Square will only send 1099-Ks if you exceed $20,000 and 200 transactions — not for just $600 anymore.

Farmland Installment Sale Rule
If you sell qualified farmland, you can now spread the capital gain over four years. This helps ease the tax hit when selling large property.

IRS Authority Over Partner Payments
The IRS can now reclassify payments made to partners in a business partnership — without needing to wait for formal regulations. This gives them more power in audits.

Corporate Charitable Deduction Threshold
Your business must donate more than 1% of its taxable income before the donation becomes deductible. This discourages token donations just for tax write-offs.

Paid Family Leave Credit Made Permanent
Employers can permanently claim a credit for offering paid family or medical leave. You can claim this based on wages or insurance premiums paid.

Employer-Provided Child Care Credit Expanded
If you provide child care for employees, you can now claim up to $600,000 in credits per year. This is especially helpful for small and mid-sized employers.

Student Loan Repayment Exclusion Made Permanent
Payments you make toward an employee’s student loans are still tax-free. This benefit is now permanent and will adjust with inflation.

Dependent Care Assistance Exclusion Raised
The limit on tax-free dependent care benefits for employees has increased to $7,500. This means employees can save more on daycare and other costs without paying taxes on the benefit.

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Final Thought

The 2025 tax bill locks in much of the 2017 reform and layers on new, targeted deductions meant to benefit families, workers, and small business owners. But with sunsets, phaseouts, and complex eligibility rules, this won't be a DIY tax season.

If you're a small business owner or high-income household, it’s time to revisit your tax strategy—before January 1 hits.

Let us help you navigate these changes.

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Questions?

If you have questions about how these changes affect your personal or business taxes, don’t hesitate to contact us. We’re here to help you plan wisely and take full advantage of these new rules.