By Thomas Van Blunk
With the start of the new year, we want to take this opportunity to inform you of the tax law changes you should expect to see. Below are some of the most important changes that you should be aware of when you file your 2025 tax return.
Long-Term Capital Gain Rates
The long-term capital gain rates and qualified dividends have changed for 2025:
| Filing status | 0% rate | 15% rate | 20% rate | |||
| 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | |
| Single | $0 to $47,025 | $0 to $48,350 | $47,026 to $518,900 | $48,351 to $533,400 | $518,901 and above | $533,401 and above |
| Married, filing separately | $0 to $47,025 | $0 to $48,350 | $47,026 to $291,850 | $48,351 to $300,000 | $291,851 and above | $300,001 and above |
| Head of household | $0 to $63,000 | $0 to $64,750 | $63,001 to $551,350 | $64,751 to $566,700 | $551,351 and above | $566,701 and above |
| Married, filing jointly | $0 to $94,050 | $0 to $96,700 | $94,051 to $583,750 | $96,701 to $600,050 | $583,751 and above | $600,051 and above |
Unemployment Compensation
For 2025, unemployment compensation will be fully taxable.
Health Savings Accounts (HSAs)
For tax year 2025, the annual cap for deductible contributions to health savings accounts increased from $4,150 to $4,300 for self-only coverage, and from $8,300 to $8,550 for family coverage. An additional “catch-up” contribution of $1,000 is available for individuals age 55 and older.
Retirement Plans
The required minimum distributions are necessary for 2025 only if you were 73 years old in 2024, thereby requiring your first required minimum distribution by April 1, 2025, and the second by December 31, 2025. If you reach the age of 73 in 2025, you will not have to take a required minimum distribution until the 2026 tax year, which will be due by April 1, 2027.
Standard Deduction
The Standard Deduction increased for 2025:
| Filing Status | Standard Deduction | Additional Standard Deductions Blind OR 65 or older | Additional Standard Deductions Blind AND 65 or older | |||
| 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | |
| Single | $14,600 | $15,750 | $1,950 | $2,000 | $3,900 | $4,000 |
| Married, filing separately | $14,600 | $15,750 | $1,550 | $1,600 | $3,100 | $3,200 |
| Head of household | $21,900 | $23,625 | $1,950 | $2,000 | $3,900 | $4,000 |
| Married, filing jointly | $29,200 | $31,500 | $1,550 | $1,600 | $3,100 | $3,200 |
Charitable Gift Deduction
For tax year 2025, the limit on charitable cash contributions is up to 60% of the taxpayer’s adjusted gross income in monetary gifts. When filing your tax return make sure that cash contributions do not exceed the charitable contributions limit of 60%.
Long-Term Care Insurance Premiums
The deduction for long-term care insurance premiums has increased for 2025:
| Age | 2024 Deduction | 2025 Deduction |
| 40 years of age and younger | $470 | $480 |
| 41 to 50 years of age | $880 | $900 |
| 51 to 60 years of age | $1,760 | $1,800 |
| 61 to 70 years of age | $4,710 | $4,810 |
| 71 years of age and older | $5,880 | $6,020 |
Taxpayers are still subject to the 7.5% limitation of their adjusted gross income with respect to the medical deduction when itemizing deductions.
Standard Mileage Rates
For 2025, the standard mileage rates are $0.70 per mile for business, and $0.21 per mile for medical travel and military moving (qualified active-duty members). The business mileage rate reflects an increase from the 2024 rate of $0.67 per mile, while the medical travel and military moving rates remain unchanged. The charitable driving rate remains at $0.14 a mile as it has been in previous years.
Alternative Minimum Tax
For 2025, the alternative minimum tax exemption has increased from $133,300 to $137,000 for married filing jointly filing filers, and from $85,700 to $88,100 for single and head-of-household filers.
There are also higher phaseouts for this exemption in 2025. The phaseouts are $1,252,700 for married filing jointly filers and $626,350 for single and head-of-household filers, which is an increase from the 2024 amounts of $1,218,700 and $609,350, respectively.
Estate and Gift Taxes
For 2025, the lifetime estate and gift tax exclusion has increased from $13.61 million to $13.99 million. The 2025 gift tax exclusion is up $1,000 from the 2024 amount of $18,000; now standing at $19,000 per recipient without having to file a gift tax return or tap into your lifetime estate and gift tax exemption.
Tax Brackets for 2025:
| Tax Rate | Single | Married, filing separately | Head of household | Married, filing jointly |
| 10% | $0 to $11,925 | $0 to $11,925 | $0 to $17,000 | $0 to $23,850 |
| 12% | $11,926 to $48,475 | $11,926 to $48,475 | $17,001 to $64,850 | $23,851 to $96,950 |
| 22% | $48,476 to $103,350 | $48,476 to $103,350 | $64,851 to $103,350 | $96,951 to $206,700 |
| 24% | $103,351 to $197,300 | $103,351 to $197,300 | $103,351 to $197,300 | $206,701 to $394,600 |
| 32% | $197,301 to $250,525 | $197,301 to $250,525 | $197,301 to $250,500 | $394,601 to $501,050 |
| 35% | $250,526 to $626,350 | $250,526 to $375,800 | $250,501 to $626,350 | $501,051 to $751,600 |
| 37% | $626,351 and higher | $375,801 and higher | $626,351 and higher | $751,601 and higher |
Child Tax Credit
For the 2025 tax year, the Child Tax Credit (CTC) is $2,200 per child aged under 17 years old; an increase from $2,000 in 2024. The refundable portion, also known as the Additional Child Tax Credit (ACTC), is worth up to $1,700 for each qualifying child. The CTC/ACTC decreases if your adjusted gross income exceeds $400,000 for married filing jointly, or $200,000 for all other filers.
Earned Income Tax Credit
For 2025, individuals who work without qualifying children will still be able to claim the earned income tax credit. Those without a qualifying child must be between 25-65 years of age at the end of the year, live within the United States, and cannot be claimed as a dependent by another taxpayer.
The maximum EIT credit has increased for 2025
| Dependents | 2024 Tax Year | 2025 Tax Year | % Increase |
| No children | $632 | $649 | 2.69% |
| One child | $4,213 | $4,328 | 2.73% |
| Two children | $6,960 | $7,152 | 2.76% |
| Three+ children | $7,830 | $8,046 | 2.76% |
Education Tax Breaks
There are two types of education credits, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). See threshold limitations below:
| American Opportunity Tax Credit (AOTC) | Lifetime Learning Credit (LLC) | |
| Modified Adjusted Gross Income – Single | $80,000 to $90,000 | $80,000 to $90,000 |
| Modified Adjusted Gross Income – Married, filing jointly | $160,000 to $180,000 | $160,000 to $180,000 |
| Maximum credit | $2,500 per student | $2,000 per return |
| Refundable | Yes, 40% refundable (up to $1,000) | No |
| Eligible expenses | Tuition, fees, and course-related books, supplies, and equipment | Tuition, fees, and course-related books, supplies, and equipment only if paid to the institution as a condition of enrollment |
| Years of eligibility | Can only be claimed for four years; must be within the first four years of post-secondary study | No limit |
| Enrollment requirements | Enrolled at least half-time | Enrolled in at least one course |
| Criminal record restrictions | No felony drug convictions | No restrictions |
In addition to the tax law changes discussed above, the One Big Beautiful Bill introduced a range of new and expanded deductions taking effect beginning in 2025. These provisions are designed to reduce taxable income for many taxpayers and include measures such as enhanced deductions for seniors, reduced taxation on tips and overtime pay, and potential deductions related to car loan interest, among others.
As with all the above strategies, we highly encourage you to discuss any strategies with your accountant before implementation. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult with your own tax, legal, or accounting advisor before engaging in any transaction. If you have any questions regarding the 2025 tax law changes, please do not hesitate to contact us at Lear & Pannepacker.