Top 5 IRS Tax Changes for 2025

As of the 2025 tax year, several majorchanges under the "One Big Beautiful Bill Act" have reshaped taxplanning. Here are the five most important updates you need to know.

1. Permanent Tax Rates & Inflation-Adjusted Brackets

The seven federal tax brackets establishedunder the 2017 TCJA—10%, 12%, 22%, 24%, 32%, 35%, and 37%—are now permanentlyin place for 2025 and beyond. Thresholds for each bracket have also beenadjusted upward to reduce "bracket creep".

2. Standard Deduction & Senior Bonus Increase

Standard deduction limits rose to: $15,000(single), $30,000 (married filing jointly), $22,500 (head of household).Additionally, taxpayers aged 65+ can claim a new bonus deduction of up to$6,000 (phasing out over income thresholds of $75K single / $150K joint).

3. SALT Deduction Cap Increased

The cap on state and local tax (SALT)deductions is now $40,000 for taxpayers earning under $500,000. Above thatthreshold, phase‑outs apply, reinstating the prior $10,000 cap long-term.

4. No‑Tax Overtime & Tip Income Deductions

New provisions allow qualifying workers todeduct certain overtime and tipped earnings dollar-for-dollar—up to$25,000—through 2028, helping lower taxable income.

5. Immediate Expensing for Capital Investment

Businesses can now expense the full cost ofeligible capital investments—like AI data centers or machinery—in the yearpurchased, boosting cash flow and incentive for growth.

Planning Tips

• Evaluate itemizing vs. standard deductionbased on SALT and senior deductions.
• Seniors should confirm eligibility for the additional deduction.
• Businesses investing in equipment should consider accelerated expensing.
• Employees earning overtime or tips may benefit from reduced taxable wageincome.