Tax Law Shifts for 2025: Key Changes Every Taxpayer Should Understand

Tax season often sneaks up quicker than expected, and the difference between smooth filing and last-minute panic often comes down to preparation. Picture yourself enjoying the coming year—a few smart tax moves now can help you stress less come April. With substantial tax changes on the horizon for 2025, knowing what’s ahead gives you the power to make confident, informed decisions.

Rising Standard Deduction and New Senior Deduction

The IRS will increase the standard deduction for {year}, providing more relief to every household. For individual filers, the standard deduction rises to $16,100. Married couples filing jointly can deduct $32,200, while heads of household are set at $24,150. This simplifies filing and reduces taxable income before considering itemized deductions.

Seniors receive an extra benefit—brand new for {year} through 2028. Each person age 65 or above can claim a $6,000 deduction. There are some income limitations: for unmarried seniors, the deduction is reduced if your adjusted gross income goes above $75,000. Married couples see the phaseout begin at $150,000. Both standard and itemized deduction filers can claim this—so even if you don’t itemize, you won’t miss out.

Here’s an example: Henry (72) is single with $60,000 in income. He can use the $16,100 standard deduction and add the $6,000 senior deduction, reducing the taxable portion of his income by $22,100.

Tax statistics for standard and senior deduction

Required Minimum Distributions: Starting at Age 73

If you have a traditional IRA or other tax-deferred retirement account, the rules for required minimum distributions (RMDs) are especially important. Now, you must start annual withdrawals the year you turn 73. These distributions are calculated by dividing your account’s year-end value by the IRS’s life expectancy table.

Suppose Sarah turns 73 in {year}. She has $100,000 in her IRA at year-end. If the calculated life expectancy is 25.5 years, she’ll need to withdraw at least $3,922 ($100,000 ÷ 25.5) to comply with the RMD rules.

Financial advisor discussing RMD calculations

Bonus Depreciation Returns to 100%

There’s good news for business owners: full, 100% bonus depreciation makes a comeback for property placed in service after January 19, {year}. This means businesses can immediately deduct the entire cost of qualifying new or used machinery, equipment, and certain improvements with a recovery period of 20 years or less.

For example, let’s say a small manufacturing shop purchases $120,000 in new equipment in March. The shop can write off that full amount on its {year} return, significantly lowering taxable business income. Previously, only 40% would have been eligible for bonus depreciation if placed in service before January 19.

Small business owner considering bonus depreciation

SALT Cap Expansion: Bigger Deductions for State and Local Taxes

The deduction limit for state and local taxes (or SALT deduction) gets a facelift for {year}. The cap rises to $40,000 (from the previous $10,000), a substantial change for those who pay significant state income or property taxes. However, for higher income taxpayers, the actual deduction allowed starts decreasing at $500,000 modified adjusted gross income and bottoms out at $10,000 for those over $600,000. The $40,000 deduction is available for most filers, and the cap continues to rise slightly each year through 2029, returning to $10,000 in 2030.

Here’s a plain-English example: Jane and Mark pay $32,000 in combined state property and income taxes. On their {year} return, they can claim the full $32,000 under the new SALT limit (since it’s under $40,000), reducing their federal taxable income and potentially lowering their bill by thousands. In the past, they would have been limited to just $10,000.

Home subject to new SALT deduction rules

Next Steps: Stay Ahead of the Curve

Tax laws shift frequently, but with proactive planning, you can unlock every benefit available. Understanding the new standard and senior deductions, planning for RMDs at age 73, leveraging full bonus depreciation, and recognizing how much more you can deduct with the adjusted SALT cap can all have a big effect on your finances. Every taxpayer’s situation is unique—these rules may open doors you haven’t considered, or require strategy changes, particularly for retirees, business owners, or those with sizable state tax bills.

Tax professionals strategizing for the new tax year

For personalized guidance, contact Davita Pray CPA PC to map your {year} strategy.

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