Times Are A-Changing: What’s New With This Year’s Taxes
They say nothing is certain in life except death and taxes, but even tax laws are constantly changing. With the recent change in administration, those changes are a little more abrupt for the 2025 tax season, which means you need to know what’s going on before you file.
So, buckle up, and let’s take a closer look at what’s changing in 2025.
What’s On the Chopping Block? TCJA Provisions Expire Soon
Have you enjoyed tax breaks from the 2017 Tax Cuts and Jobs Act (TCJA)? As of the writing of this article, major changes are afoot, including:
A change in individual tax rates - We’ll be dropping to pre-2017 individual tax rates. For most people, that means paying higher taxes.
SALT deduction cap will expire - The TCJA had a $10k cap on state and local tax (SALT), which is expiring soon. If you pay high taxes in your state, that isn’t a bad thing but it will affect the government’s revenue.
Reduced child tax credit - The $2,000 per child tax credit is being reduced to $1,000 unless something changes.
Reduced standard deductions - Another big deal is the fact that standard deductions are getting cut by around 50%. Personal exemptions may be back after this.
While none of these changes are happening right now, they are set to be implemented after 2025, so start planning now for a better result.
2025 Means Big Changes
Some tax breaks are vanishing before your very eyes, but others are taking their place. Let’s check out what you can expect in 2025 (that we know of so far!).
Adjustments to Corporate Tax Rates
For decades, tax professionals have recommended choosing an S Corp entity type for LLCs that see profits of $50-100k. That’s all changing, though, with the new personal and corporate tax rates. Before you decide on your business entity, consult with a tax pro to calculate whether Corp or S Corp is best for your company.
Changes to Business Taxes
Big corporations are seeing more loopholes closing. The idea is to reduce the appeal of going offshore, so businesses stick to their USA roots. More corporate money in the U.S. is the goal!
You may also notice some changes in business deductions for anyone who is self-employed. You’ll need to watch the news for this one because no one is entirely sure what’s coming. At this point, we can just speculate and make sure we’re ready to take advantage of anything good coming down the pipe.
How to Keep Up With It All!
If this seems like a big crazy mess to you, you’re not alone. Taxes can be confusing! Fortunately, there’s help. Hiring a tax expert can keep you on track and help ensure you don’t miss any of the benefits and tax breaks you’re eligible for.
Ready to learn more and turn the reins over to someone who knows what they’re doing? Contact Ask Anna Tax today.
