Tax Information
As tax professionals prepare for the upcoming 2026 filing season, it’s important to be aware of several significant federal tax law changes enacted under the One Big Beautiful Bill Act. Many of these provisions apply beginning with the 2025 tax year and impact both individual and business returns.
Below is a comprehensive overview of the key changes you should be prepared for.
Tip Income and Overtime Pay Deductions
The One Big Beautiful Bill Act introduced new deductions for tip income and overtime pay for tax years 2025 through 2028.
Child Tax Credit Changes
Several updates were made to the Child Tax Credit beginning in 2025:
- Maximum Child Tax Credit: $2,200
- Maximum refundable portion: $1,700
- The taxpayer must now have a valid Social Security Number to claim the credit
Increase in the Standard Deduction
The One Big Beautiful Bill Act made the increased standard deduction permanent and added an additional increase beginning in 2025:
- $1,500 for Married Filing Joint
- $1,125 for Head of Household
- $750 for all other filers
With these increases, the standard deduction for tax year 2025 is:
- $15,750 – Single
- $31,500 – Married Filing Joint
- $23,625 – Head of Household
THE TOP 4 INVESTMENTS EVERY HIGH-INCOME EARNER SHOULD REDUCE TAXES
Attention HIGH W-2 EARNERS!
I’ve advised hundreds of clients on how they can save in taxes and protect their assets. Every now and then I’ll receive inquiries from individuals who are High W-2 wage earners who are curious about tax planning and if it will work for them. I’m going to share with you how the U.S. Tax System works and from here you can decide for yourself if tax planning for you is necessary.
The tax code rewards individuals who participate in the marketplace and do business with the government. We are NOT talking about taxpayers who participate in an employee stock option program. The tax code rewards individuals who purchase or create paper stocks as this is a real risk.
Depending on your income type will signal the type of tax benefits and loopholes you get to participate in.
Let’s start with the four types of income that any taxpayer can generate.
The first income type is Employee. Employee income is known as W-2 wages. W-2 wages are the most expensive type of income that any taxpayer could earn and the easiest to obtain.
For example, when you receive your paycheck, you notice that you’ve been taxed paying social security taxes, federal and state withholding taxes. After you receive your paycheck, and you begin to use your paycheck you notice that you are required to pay consumption taxes. And last, when you begin to make more money with your employer you notice that you are required to pay more in taxes. It never ends.
A consumption tax is known as a sales tax, a food and beverage tax and excise taxes. These are the taxes that you pay in your everyday American life. As W-2 earners, you pay these taxes and receive no tax benefit from paying the tax.
The only tax incentives that you are allowed to receive are from your employer. Your employer puts all the risk to be rewarded to hire you and offer benefits.
THE ULTIMATE GUIDE TO WRITING OFF YOUR VEHICLE COSTS FOR BUSINESS USE
Did you know that if you use your vehicle for business purposes, you may be eligible for significant tax deductions?
As a business owner, you’re always on the lookout for ways to minimize your tax liability and maximize your deductions. In this comprehensive guide, we’ll delve into the world of vehicle expenses for business use and explore how tracking mileage, fuel, and maintenance costs meticulously can lead to substantial tax savings.
Understanding Business Vehicle Deductions
Business vehicle deductions are a valuable tax benefit for entrepreneurs and small business owners who use their personal vehicles for work-related purposes. The IRS allows eligible taxpayers to deduct certain vehicle expenses to offset their taxable income. But the key here is to maintain accurate records and meet specific IRS requirements.
IRS RELEASES TAX INFLATION ADJUSTMENTS FOR TAX YEAR 2025
The tax year 2025 adjustments described below generally apply to income tax returns to be filed starting tax season 2026. The tax items for tax year 2025 of greatest interest to many taxpayers include the following dollar amounts:
- Standard deductions. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024.
- Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
- 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
- 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
- 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
- 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
- 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
- 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
2026 Tax Law Updates
As tax professionals prepare for the upcoming 2026 filing season, it’s important to be aware of several significant federal tax law changes enacted under the One Big Beautiful Bill Act. Many of these provisions apply beginning with the 2025 tax year and impact both individual and business returns.
Below is a comprehensive overview of the key changes you should be prepared for.
Tip Income and Overtime Pay Deductions
The One Big Beautiful Bill Act introduced new deductions for tip income and overtime pay for tax years 2025 through 2028.
Child Tax Credit Changes
- Maximum Child Tax Credit: $2,200
- Maximum refundable portion: $1,700
- The taxpayer must now have a valid Social Security Number to claim the credit
Increase in the Standard Deduction
- $1,500 for Married Filing Joint
- $1,125 for Head of Household
- $750 for all other filers
With these increases, the standard deduction for tax year 2025 is:
- $15,750 – Single
- $31,500 – Married Filing Joint
- $23,625 – Head of Household
New Senior Deduction
- Available for both the taxpayer and spouse
- Deduction begins to phase out when AGI reaches $75,000 ($150,000 for MFJ)
- Taxpayer and spouse must have a Social Security Number
- Calculated on new Schedule 1-A, Section V
Qualified Car Loan Interest Deduction
- Applies to interest paid on loans for qualified vehicles purchased in 2025
- Qualified vehicles include cars, minivans, vans, SUVs, pickup trucks, or motorcycles
- Vehicles must have a gross vehicle weight rating under 14,000 pounds
- Final assembly must have occurred in the United States
- Vehicle must be for personal use
- Deduction phases out when AGI reaches $100,000 ($200,000 for MFJ)
- The VIN must be entered on the return on Schedule 1-A
- Final assembly info can be verified via NHTSA VIN Decoder
- Calculated on Schedule 1-A, Section IV
SALT Deduction Limitation (Schedule A)
- Maximum SALT deduction increased to $40,000 for 2025
- Once AGI reaches $500,000, the limit reduces to $10,000
- Available for tax years 2025 through 2029
- Limit and AGI threshold adjusted annually for inflation
Adoption Credit Update
For tax years 2025 through 2028, up to $5,000 of the adoption credit is refundable.
Bonus Depreciation
100% bonus depreciation is available for qualified property acquired after January 19, 2025.
Clean Vehicle Credits for 2025
- New Clean Vehicle Credit
- Used Clean Vehicle Credit
- Commercial Clean Vehicle Credit