What's New with Tax Returns in 2025 for US Citizens

• Author: Miguel Waters
• Posted: 2025-01-08

In 2025, people in the United States will notice some important changes to their tax returns. These updates might seem small, but they’re important because they can affect how much money you owe the government at the end of the year. 

Knowing these changes is key to avoid surprises and possibly save some money on taxes.

Here's a breakdown of the five main changes coming in 2025:
 

Higher Standard Deductions:

 

• If you're filing by yourself, your standard deduction will increase by $400 to $15,000.
• Married and filing together? Yours goes up by $800 to $30,000.
• If you're the head of your household, expect a $600 raise to $22,500.

 

Tax Bracket Adjustments:

 

• The income limits before you bump up to the next tax bracket are going up. This means you might earn more without paying a higher percentage of your income in taxes.
• The highest tax rate, 37%, will now start at incomes over $626,350 for singles and $751,600 for married couples.

 

Bigger Tax Credits for Some Expenses:

 

• The amount you can get back for certain tax credits, like the Earned Income Tax Credit (EITC), is going up.
• People saving for retirement in a 401(k) can put away an extra $500. If you’re between 60 and 63, you can add up to $11,250 more.

 

Changes to the Alternative Minimum Tax (AMT):

 

• There will be new exemption amounts: $88,100 for single filers and $137,000 for those married and filing together.

 

State and Local Tax (SALT) Deductions Stay the Same:

 

• The cap on how much you can deduct for state and local taxes remains at $10,000.

These updates are aimed at making tax returns more favorable for many people, allowing them to possibly pay less in taxes due to increased deductions and adjusted tax brackets.

Remember, not everyone will be affected by these changes in the same way. To fully understand how these updates impact you, it might be a good idea to talk to a tax advisor, especially when preparing your documents for tax return.

Keeping these changes in mind and planning accordingly can help ensure that your tax return process goes smoothly and possibly more beneficially in 2025.

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