Standard Deduction

Standard deductions increased for 2025 as follows:

Single = $15,750

Single Seniors = $17,750

Married Filing Joint = $31,500

Married Filing Joint Seniors = $34,700

Head of Household = $23,625

NEW Additional Senior Deduction

Taxpayers aged 65 or older (and their spouses, if filing jointly) can claim a $6,000 additional deduction per qualified individual.

The deduction is reduced by 6% for AGI that exceeds $75,000 ($150,000 for joint filers).

Child Tax Credit

The credit for 2025 is as follows (subject to AGI limitations):

$2,200 for each child under the age of 17 (17 year old children are not eligible for the credit in 2025)

$500 for other dependents, including children aged 17 and older, children with no SSN and qualified dependents who are not children (i.e. parents or siblings)

Medical Expense Deduction

The AGI threshold for 2025 remains at 7.5%.  Therefore, any out of pocket medical expenses you incur above 7.5% of your AGI (and you exceed the standard deduction amount) can be deducted. You must be able to itemize deductions to qualify.

Charitable Contributions

The 60%-of-AGI limit on deductions for CASH donations by individuals who itemize is in effect for 2025. You must itemize on Schedule A and does not include excess charitable contributions from prior years.

Capital Gains

1. Short-term capital gains are still taxed as ordinary income for investments held less than one year.

2. Long-term capital gains tax rates rates remain the same (0%, 15% or 20%) depending on filing status and income level. Income thresholds for each rate increase slightly for 2025.

3. The 3.8% net investment income tax rate (Medicare surtax) that applied to high earners remains the same.

Individual SALT (State and Local Tax) Deduction

Deduction cap is increased from $10,000 to $40,000 for 2025.

Includes taxes paid for State income taxes, property taxes on real estate and personal property, sales/use tax.

You must be able to itemize deductions to qualify.

High-income taxpayers will be able to claim this deduction at $10,000 when subject to MAGI phaseouts.

NEW No Tax on Car Loan Interest

Beginning in 2025, taxpayers can deduct up to $10,000 of car loan interest per year subject to MAGI phaseouts. Taxpayers must meet the following criteria:

1. The debt must be incurred in 2025 for the purchase of a NEW personal use vehicle (cannot be a used vehicle).
2. The original use of the vehicle must be with this taxpayer (i.e. cannot be a used vehicle).
3. The vehicle must be a car, minivan, van, SUV, pickup truck, or motorcycle with a gross vehicle weight rating under 14,000 pounds.
4. Final assembly of the vehicle must occur in the United States.
5. Taxpayer must report the vehicle VIN number on their tax return.

Loan lenders will be reporting interest received on qualified vehicle loans to the IRS each year and will distribute statements to taxpayers (similar to how mortgage lenders report real estate interest today).

NEW No Tax on Tips

Taxpayers who receive qualified cash tips in occupations where tipping was customary before January 1, 2025 are eligible for a deduction up to $25,000 per year per taxpayer in 2025. The deduction will begin to phase down for taxpayers with MAGI above $150,000 single, $300,000 married filing joint.

Examples of customary tipping occupations: restaurant servers, beauty/barber shop, valet attendants, ride-share drivers, food delivery drivers, etc.

This deduction can be claimed as an additional deduction after the standard deduction (do not have to itemize deductions to qualify).

If married, you must file as Married Filing Joint to claim this deduction. Cannot file Married Filing Separate.

For 2025, employers are not required to meet the new W2 tip reporting requirements, so tips included in your income will be reported in Box 1, 5 and 7 of your W2 as they have in prior years. You can only deduct tips that have been included in your gross income. Tips not claimed as income cannot be included in the deduction.

Beginning in 2026, employers will report designated cash tips and your occupation on forms W2, 1099 and 1099-K. These reported amounts can be used toward your annual tip deduction.

NEW No Tax on Overtime

Taxpayers who receive overtime compensation in 2025 are eligible for a deduction up to $12,500 if single, $25,000 if married filing joint per year. The deduction will begin to phase down for taxpayers with MAGI above $150,000 single, $300,000 married filing joint.

This deduction can be claimed as an additional deduction after the standard deduction (do not have to itemize deductions to qualify).

If married, you must file as Married Filing Joint to claim this deduction. Cannot file Married Filing Separate.

Businesses

1. Business meals for 2025 remain 50% deductible. This includes meals for employee business meetings/events, client meals, and meals for employees on business travel.

NOTE: Beginning in 2026, meals for employee business meetings/events provided by the employer will no longer be deductible except for employee travel meals. Travel meals will be 100% deductible in 2026. Client meals will remain 50% deductible in 2026.

2. Pass through companies (S-Corporations, Partnerships, LLCs and sole proprietors) still receive a 20% deduction of qualified business income.  The taxable income limitation thresholds increase in 2025 ($394,600 married/$197,300 single). This deduction is complex and does have certain restrictions for service-type companies (law, accounting, health and financial services), so please contact me if you have specific questions.

3. 100% Bonus Depreciation for the purchase of certain assets that are put into use AFTER January 19, 2025. This deduction will be permanent going forward.

4. Business mileage rate for 2025 is $0.70 per mile, $0.21 per mile for medical and $0.14 for charitable work.

5. The C-Corporation tax rate remains at a flat 21%.

6. 1099-K Third-Party Network Transaction Reporting is required when aggregate transactions exceed both $20,000 AND 200 transactions. This applies to taxpayers using transaction companies such as Paypal, Ebay, Amazon, Uber, Lyft, etc. If a taxpayer receives this form from a transaction company, they must claim the income on their personal or business tax return.

There are many more small changes to both business and individual taxes, but this blog was intended to educate you on the major changes that effect the majority of taxpayers.  If you have any specific examples or items you would like to discuss, please contact me!

In order to stay ahead of the newest IRS Deadlines, please take note of the following dates:

January 15, 2026

4th Quarter 2025 Estimated Tax Payment Due

January 26, 2026

2025 Tax Season begins. IRS begins to accept 2025 tax returns

January 31, 2026

2025 W-2, 1099-MISC, 1099-NEC Filing Deadline for Businesses
(Must provide to employee/contractor and file with IRS/SSA)

March 16, 2026

S-Corporation (1120S) Tax Returns Due for 2025 Tax Year

Partnership (1065, including multi-member LLC) Tax Returns Due for 2025 Tax Year

S-Corporation and Partnership Extension Requests Due for 2025 Tax Year

April 15, 2026

Individual (1040) Tax Returns Due for 2025 Tax Year

Trust and Estate (1041) Tax Returns Due for 2025 Tax Year

C-Corporation (1120) Tax Returns Due for 2025 Tax Year

Individual Tax Return Extension Request Due for 2025 Tax Year

Last day to make a 2025 IRA and HSA Contributions

1st Quarter 2026 Estimated Tax Payment Due

May 01, 2026

Deadline to renew your Florida formed Corporation (S-Corps, C-Corps and LLCs) or Partnership with the Florida Department of Revenue (Sunbiz.org)

June 15, 2026

2nd Quarter 2026 Estimated Tax Payment Due

September 15, 2026

S-Corporation (1120S) Extended Returns Due for 2025

Partnership (1065) Extended Returns Due for 2025

3rd Quarter 2026 Estimated Tax Payment Due

October 15, 2026

Extended 2025 Individual Tax Returns Due

Extended 2025 C-Corporation Tax Returns Due

January 15, 2027

4th Quarter 2026 Estimated Tax Payment Due

Since 2022, there have been extensive fraudulent letters being mailed to US taxpayers that appear to be from the Internal Revenue Service. These letters may look legitimate to your average taxpayers who are not experienced with the formatting of an official correspondence letter from the IRS. Many versions of these fraudulent letters are circulating, but a professional tax preparer should be able to identify the clear errors within these letters. Please read the following tips and take a look below at some of the fraudulent letters my clients have received.

Key tips:

1. If you receive any letters that have the IRS logo or claim to be from the Internal Revenue Service or US Department of Treasury, always reach out to a professional tax preparer or CPA before responding to the letter.
2. NEVER give out your social security number over the phone. The IRS has multiple ways of identifying you as the correct taxpayer without asking you for your full social security number.
3. If you call a number listed on an official IRS letter, you will ALWAYS hear an automated welcome recording from the Internal Revenue Service that places you in a queue and asks for many phone prompts before you ever talk with an IRS agent. You are usually on hold for 30 minutes to an hour or longer on average. If you speak with an individual immediately upon calling a number in a fraudulent letter, this should be your first sign to hang up and not give any personal information.
4. IRS agents always provide their name and IRS agent ID when they are first connected with a taxpayer over the phone. It is good practice to write this information down in case you need to escalate your inquiry.
5. The IRS never refers to a tax return or tax year as a full date (ex. Dec 31, 2021). They always refer to a tax period by year only (ex., 2021)

If you have called a phone number from a fraudulent IRS letter and provided any personal information (social security numbers, home address, bank information, etc.), you should immediately complete an IRS Form 14039 Identity Theft Affidavit and submit to the IRS. This will allow the IRS to flag your tax accounts so if there are any fraudulent activities on future tax returns or tax returns you have already filed, you can easily make corrections and prevent incorrect penalties from being applied to your accounts. You will also want to apply for an IRS Identity Theft PIN number which will be required to be included on all future tax returns you file.

The IRS also has valuable information for identifying and avoiding scams in this help article: “Avoid scams: Know the facts on how the IRS contacts taxpayers“

For your reference I have included a legitimate letter from the IRS and some examples of actual fraudulent letters my clients have received. Please use these as a reference anytime you receive a letter regarding your taxes. Finally, please reach out to me anytime you receive a letter from the IRS or any State agency regarding your taxes.

SAMPLE: CORRECT IRS LETTER

SAMPLE: FRAUDAULENT IRS LETTER

SAMPLE: FRAUDAULENT IRS LETTER

SAMPLE: FRAUDAULENT IRS LETTER