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Syriac CPA Tax And Accounting Services Inc

Navigating the 2025 IRS Tax Reforms: What You Need to Know

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As the One Big Beautiful Bill becomes law in July 2025, major changes are underway that can affect your tax bill—whether you’re filing in 2026 for the 2025 tax year or planning ahead.

1. Expanded Standard Deductions & Brackets

  • The standard deduction for 2025 has increased to $15,000 (single), $22,500 (head of household), and $30,000 (married filing jointly) due to routine inflation adjustments.
  • The familiar seven-bracket system remains: 10%, 12%, 22%, 24%, 32%, 35%, 37%, with the top rate applying over $626,350 (single) and $751,600 (joint)

2. “Big Beautiful Bill” Tax Breaks

Effective immediately for 2025:

  • Tip income exclusion: Up to $25,000 in eligible tips is now deductible
  • No-tax on overtime: The additional half of overtime pay (time‑and‑a‑half) is deductible up to $12,500 per year
  • Senior deduction: Taxpayers 65+ can deduct an extra $6,000 ($12,000 joint), phasing out at higher incomes, available through 2028
  • Car loan interest deduction: Up to $10,000 in interest on new, U.S.-assembled auto loans may be deducted
  • Permanent Child Tax Credit increase to $2,200 per child
  • SALT cap temporarily raised to $40,000 for incomes under $500,000, phasing back later
  • EV and energy credits: Clean energy incentives are ending by late 2025.

3.  Inflation-Adjusted Thresholds & Credits

  • The Foreign Earned Income Exclusion has risen to $130,000 for 2025.
  • The earned income tax credit (EITC) maxes at $8,046 for taxpayers with 3+ children.
  • Other thresholds from AMT exemptions to retirement savings limits have also been updated.

4. IRS Delays & Filing Changes

  • A reduction of around 6,000–7,000 IRS staff during peak season may cause longer wait times and delays in refunds and audits.
  • The IRS Direct File pilot may be phased out soon, potentially increasing reliance on paid filing services.
  • The IRS has also ramped up efforts to combat scams and fraud, adding identity protections and new withholding rules.

How This Affects You

  1. Check eligibility for new deductions tips, overtime, auto loans, seniors, and SALT.
  2. Update your withholding or estimated payments to reflect raised brackets and credits.
  3. Plan home or vehicle purchases considering the phase-out of EV credits vs. auto loan interest deduction.
  4. Consider professional help complex changes and looming IRS delays may benefit from expert guidance.

In Summary

The 2025 tax landscape brings valuable new deductions and expanded allowances, but also evolving deadlines, IRS staffing challenges, and program eliminations. Stay ahead by tailoring your tax strategy now ideal time to consult with Syriac CPA to make the most of these changes and secure peace of mind.

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