What to Know Before Filing Your 2025 Taxes

As tax season approaches, organizing documents early can help you manage deadlines and avoid surprises. Several rule changes that may affect your 2025 return include both routine incremental adjustments and updates from the One Big Beautiful Bill Act (OBBBA). Reviewing these changes now can help you maximize deductions, spot planning opportunities and avoid surprises when you file.

Key Deduction Changes

Higher Standard Deduction
For 2025, the standard deduction increases to $15,750 for single filers and $31,500 for joint filers.
Expanded Child Tax Credit
The Child Tax Credit rises to $2,200 per qualifying child.

New Deductions Introduced by the OBBBA

Personal Deduction for Seniors
Individuals born before January 2, 1961, may claim an additional deduction of $6,000, or $12,000 for joint filers. The benefit phases out for modified adjusted gross income (MAGI) between $75,000–$175,000 (single) and $150,000–$250,000 (joint).
Tip Income Deduction
From 2025–2028, taxpayers may deduct up to $25,000 in eligible tips per a return in industries where tipping is customary, with phaseouts beginning at MAGI of $150,000 (single) or $300,000 (joint).
Overtime Pay Deduction
A deduction is available from 2025 through 2028 for the premium portion of overtime pay. In most cases, this refers only to the premium portion of overtime, for example, the extra “half” in “time-and-a-half” pay, rather than the worker’s full hourly wage. It is capped at $12,500 for single filers and $25,000 for joint filers for MAGI below $150,000 (single) or $300,000 (joint). The deduction phases out and ends at $275,000 (single) or $550,000 (joint).
Car Loan Interest Deduction
Taxpayers who finance a new U.S.-built vehicle in 2025 may deduct up to $10,000 in interest. The deduction phases out above $100,000 MAGI for single filers and $200,000 for joint filers. Vehicles must have VINs beginning with 1, 4, or 5. This "above-the-line" deduction reduces taxable income for both standard and itemizing filers.

In future years, lenders will be required to report auto loan interest payments directly to both taxpayers and the IRS. For this year, you may need to do a little digging through your loan statements, or you can request a summary of interest paid from your lender.

Additional Reporting and Contribution Rules

Cryptocurrency Reporting
Digital asset transactions now require reporting, and platforms such as Coinbase issue Form 1099-DA. Gains may be subject to capital gains tax; digital currency received as payment is taxable income.
IRA Contributions for 2025
It’s not too late to fund your IRA. Contributions to traditional or Roth IRAs for the 2025 tax year may be made until April 15, 2026. The limit is $7,000, with an additional $1,000 catch-up for those aged 50 or older.
2026 Retirement Contribution Updates
- IRA contribution limits increase to $7,500, plus a $1,100 catch-up, bringing the total limit to $8,600.
- Roth IRA income phaseouts rise to $153,000–$168,000 (single) and $242,000–$252,000 (joint).
- Workplace retirement accounts 401(k), 403(b), 457 plan limits rise to $24,500, with an $8,000 catch-up for those 50 and older, bringing their total limit to $32,500. Individuals ages 60–63 may contribute an additional $11,250, raising their total contribution limit to $35,750. High-income earners must make catch-up contributions on a Roth basis.

Gift & Estate Updates

The OBBBA makes permanent the higher estate and gift tax exemption, set at $13.99 million for 2025 and increasing to $15 million in 2026. The annual gift exclusion remains $19,000 per recipient

for both 2025 and 2026. While it’s too late to make a tax-free gift for 2025, now is a good time to begin planning gifting strategies for 2026.

Planning Considerations

These changes may affect your deductions, income thresholds, and long-term planning. Reviewing your situation early and consulting a qualified professional can help you take full advantage of the current rules.

If you have any questions, we’re here to help bring clarity and confidence as you head into the filing season.