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Breaking Down the Latest Tax Law Changes: What You Need to Know Before Filing in 2025
Be prepared when it’s time to file
The 2025 tax season will be unique, bringing new rules, adjustments, and opportunities for taxpayers. Let’s walk through the latest changes that could impact your tax return, from income tax rates to credits and deductions, so you’ll be prepared when it’s time to file.
1. Updated Tax Brackets for 2025
The IRS updates tax brackets annually to account for inflation, and 2025 is no different. The new brackets aim to ease the tax burden slightly for taxpayers, especially those with middle or lower incomes. Here’s a quick overview of the expected changes:
These brackets adjust how much tax you pay based on your income, so knowing where you stand can help with planning.
2. Standard Deduction Increases
For 2025, the standard deduction will increase due to inflation adjustments. This deduction reduces your taxable income, lowering your overall tax bill. Here’s how it breaks down:
· Single Filers: $14,000 (up from $13,850 in 2024)
· Married, Joint Filers: $28,000 (up from $27,700 in 2024)
· Head of Household: $20,000 (up from $19,250 in 2024)
These changes mean more taxpayers might choose the standard deduction over itemizing, especially if their itemized deductions fall below these thresholds.
3. Child Tax Credit Adjustments
The Child Tax Credit (CTC) will see some changes in 2025, aimed at providing additional support to families with children:
· Maximum credit: $2,500 per qualifying child, down slightly from the $3,000 maximum in 2024.
· Age limits: Children under age 17 by the end of 2025 qualify for the credit.
· Phaseout limits: The credit starts phasing out for single filers earning above $120,000 and for married couples earning above $200,000.
For families who rely on this credit, these changes could mean a smaller credit amount than in previous years.
