2025 Tax Law Changes Every Preparer Must Know
Critical updates and changes for the 2025 filing season that will impact your clients and your tax preparation practice.
2025 Tax Changes
Stay Compliant & Current
🚨 Critical Update Notice
Several major TCJA provisions are set to sunset after 2025, creating significant planning opportunities and compliance challenges. Review all affected clients immediately.
Standard Deduction and Tax Brackets
2025 Standard Deduction Amounts
Individual Returns
- • Single: $14,600 (↑ $350)
- • Married Filing Jointly: $29,200 (↑ $700)
- • Married Filing Separately: $14,600 (↑ $350)
- • Head of Household: $21,900 (↑ $500)
Additional Standard Deduction
- • Age 65+ or Blind: $1,550 (Single)
- • Age 65+ or Blind: $1,250 (MFJ)
- • Dependent: Limited to earned income + $400
Tax Bracket Adjustments
All tax bracket thresholds have been adjusted for inflation. The 10%, 12%, 22%, 24%, 32%, 35%, and 37% bracket structure remains unchanged, but income thresholds have increased by approximately 2.4%.
Retirement Plan Contribution Limits
2025 Contribution Limits
401(k) Plans
- • Employee contribution: $23,500 (↑ $500)
- • Age 50+ catch-up: $7,500
- • Total limit: $70,000 (↑ $1,500)
IRA Contributions
- • Traditional/Roth IRA: $7,000 (↑ $500)
- • Age 50+ catch-up: $1,000
- • SEP-IRA: 25% of compensation
Business Tax Changes
Section 199A QBI Deduction
The 20% qualified business income deduction remains available through 2025, but income thresholds for limitations have been adjusted:
- Single filers: Phase-out begins at $191,950 (↑ $4,600)
- Joint filers: Phase-out begins at $383,900 (↑ $9,200)
- W-2 wage and qualified property limitations apply above thresholds
- Specified Service Trade or Business (SSTB) limitations continue
Bonus Depreciation Phase-Out
Bonus depreciation continues its phase-out schedule for property placed in service in 2025:
2025 Bonus Depreciation Rates
- • New property: 60% (down from 80% in 2024)
- • Used property: 60% (qualified used property only)
- • Alternative Minimum Tax adjustment required
- • Election out available on asset class basis
Individual Tax Changes
Child Tax Credit Modifications
The enhanced child tax credit provisions from recent legislation continue with adjustments:
- Credit amount: $2,000 per qualifying child (unchanged)
- Refundable portion: Up to $1,600 per child
- Phase-out begins: $400,000 (joint), $200,000 (other filers)
- Age requirement: Under 17 at year-end
Earned Income Tax Credit Updates
EITC income limits and credit amounts have been adjusted for inflation, with special provisions for taxpayers without qualifying children expanded.
Estate and Gift Tax Changes
2025 Estate Tax Exemption
- • Federal estate tax exemption: $13.61 million per person (↑ $320,000)
- • Gift tax annual exclusion: $18,000 per recipient (↑ $1,000)
- • Generation-skipping tax exemption: $13.61 million
- • Portability election continues for surviving spouses
Stay Current with Automated Updates
Our tax preparation platform automatically incorporates all tax law changes, updated forms, and new requirements so you never miss critical updates that could affect your clients.
Compliance and Procedural Changes
Enhanced Due Diligence Requirements
New due diligence requirements have been implemented for several credits and deductions:
- Expanded documentation requirements for EITC and CTC
- Enhanced verification procedures for education credits
- Strengthened substantiation requirements for charitable deductions
- New penalties for preparers failing to meet due diligence standards
Digital Asset Reporting
Cryptocurrency and digital asset reporting requirements continue to evolve, with new Form 1099-DA reporting requirements for digital asset transactions and enhanced taxpayer disclosure obligations.
Action Items for Preparers
Immediate Actions
- • Update tax software with 2025 tax tables and forms
- • Review client organizers for new reporting requirements
- • Schedule continuing education on new law changes
Client Communication
- • Send year-end planning letters highlighting key changes
- • Update engagement letters with new due diligence requirements
- • Schedule planning meetings for high-income clients
Practice Management
- • Update fee schedules to reflect increased complexity
- • Revise workflows for new compliance requirements
- • Train staff on updated procedures and documentation
Looking Ahead
The 2025 tax year represents a critical transition period as many TCJA provisions approach their sunset date. Successful tax professionals will use this opportunity to provide proactive planning advice, implement new compliance procedures, and position their practices for the significant changes coming in 2026 and beyond. Staying informed and prepared will be essential for maintaining client relationships and practice profitability.