Major 2025 Tax Law Changes: What You Need to Know
On July 4, 2025, President signed into law the Make American Workers and Families Thrive Again Act, a sweeping piece of legislation that significantly updates many provisions of the 2017 Tax Cuts and Jobs Act. With over 1,000 pages of changes, the law introduces both new opportunities and new considerations for taxpayers, businesses, and families.
Here’s a summary of the most important updates:
Income Tax Brackets Made Permanent
The 10%, 12%, 22%, 24%, 32%, 35%, and 37% federal income tax brackets are now permanent.
Personal Exemption
Permanently eliminated.
However, seniors age 65+ receive a $6,000 deduction from 2025 through 2028. This deduction phases out at $150,000 for joint filers and $75,000 for single filers.
Standard Deduction (2025 amounts)
$31,500 for Married Filing Jointly
$23,625 for Head of Household
$15,750 for Single
*Indexed for inflation starting in 2026.
Itemized Deductions
Still allowed but limited for those in the 37% bracket.
SALT Deduction (State and Local Taxes)
Cap increased to $40,000 in 2025
Increases 1% annually through 2029
Reverts to $10,000 in 2030
Phased down for MAGI above $500,000
Child Tax Credit
$2,200 per child
Now permanent and inflation-adjusted
Phases out at $400,000 (joint) and $200,000 (single)
Qualified Business Income (QBI) Deduction
Made permanent for small businesses and self-employed individuals.
Estate and Gift Tax
Exemption set at $15 million
Indexed for inflation
Permanently locked in
Alternative Minimum Tax (AMT)
Exemption and phase-out thresholds made permanent.
Mortgage Interest
Still deductible on loans up to $750,000.
Tip & Overtime Deductions
Above-the-line deductions allowed through 2027, subject to caps and income limits.
Vehicle Interest Deduction
Up to $10,000 for U.S.-assembled personal-use vehicles
Phased out for incomes above $100,000
Charitable Contributions (without itemizing)
$2,000 deduction for joint filers
$1,000 deduction for single filers
New: “Trump Deferred Account” (TDA)
A new tax-advantaged account for children born between 2025 and 2028:
$5,000 annual contribution limit
$1,000 government seed contribution
Grows tax-deferred
What’s Next?
While the law is now in effect, the IRS and Treasury are expected to issue further regulations and guidance. Because the legislation was fast-tracked without full committee hearings, more technical details will likely emerge.
Final Thoughts
The 2025 tax law overhaul represents one of the most significant shifts in U.S. tax policy since 2017. While some provisions offer long-term certainty—such as the permanent income tax brackets and QBI deduction—others, like the SALT cap and TDA, require careful planning due to phase-outs and expiration dates.
Now is the time to review your tax strategy. Whether you’re planning for retirement, optimizing your business deductions, or evaluating how to take advantage of new benefits for families, early action can help you maximize savings and avoid surprises.
We can work with you, and your with your tax professional, to ensure your financial plan is aligned with these sweeping changes.