As 2025 tax season begins, a wave of new tax law changes is rolling in—and for millions of Americans, understanding these updates is crucial for smart financial planning. Whether you’re a wage earner, a small business owner, or preparing for retirement, here’s a breakdown of the most important shifts in the U.S. tax landscape this year.

1. The Standard Deduction Has Increased

The IRS has raised the standard deduction again to adjust for inflation. For the 2025 tax year:

• • Single filers can now deduct $15,000, up from $13,850 in 2024.
  • Married couples filing jointly can deduct $30,000, up from $27,700.
  • Heads of household can deduct $22,500.

This change means fewer people may itemize their deductions, simplifying the filing process for many.

2. Child Tax Credit Adjustments

The Child Tax Credit has been updated to provide continued support to families. For 2025:

• • The maximum credit is $2,000 per qualifying child under age 17.
  • The refundable portion (Additional Child Tax Credit) is up to $1,700.
  • Phase-out thresholds begin at $200,000 for single filers and $400,000 for joint filers.

3. Changes for Gig and Freelance Workers

Self-employed individuals and gig economy workers should take note of 1099-K reporting thresholds:

• • The reporting threshold for third-party platforms (like Venmo, Etsy, or Uber) is $5,000, delayed from the originally planned $600 implementation.

More people will receive 1099-K forms and must report that income. The IRS has also released updated guidance on how to categorize and deduct expenses related to freelance work.

4. Retirement Contribution Limits Have Increased

To help Americans save more for retirement, contribution limits have gone up:

• • 401(k): You can now contribute up to $23,500.
  • Catch-Up (Age 50+): Additional $7,500.
  • Special Catch-Up (Ages 60–63): Additional $11,250.
  • IRA: The limit remains at $7,000 for those under 50, and $8,000 for those 50 and older.

These increases are part of the Secure 2.0 Act changes.

5. EV and Green Energy Incentives Expanded

If you’re going green in 2025, the tax code has some perks for you:

• • Electric vehicle (EV) credits offer up to $7,500 for new EVs.
  • Used EVs may qualify for up to $4,000, or 30% of the sale price.
  • Home energy upgrades such as solar panels, efficient windows, and heat pumps may qualify for credits up to 30% of the cost.

6. Capital Gains and Investment Income

While capital gains tax rates remain unchanged, the income thresholds have increased:

• • 0% rate: Applies to taxable income up to $47,025 (single) or $94,050 (married filing jointly).
  • 15% rate: Applies to income between $47,025 and $518,900 (single) or $94,050 and $583,750 (joint).
  • 20% rate: Applies to income above those thresholds.

The Net Investment Income Tax (NIIT) of 3.8% still applies to individuals earning more than $200,000 and couples over $250,000.

7. Expiring Provisions to Watch

Several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire after 2025. Though these changes aren’t effective yet, experts suggest planning ahead:

• • Individual income tax rate reductions
  • Doubling of the standard deduction
  • Increased estate tax exemption

If Congress doesn’t act, many Americans could see higher tax bills in 2026.

Navigating tax season can be tricky, but staying informed is half the battle. With these 2025 tax changes in mind, now’s the time to adjust your withholdings, revisit your deductions, and make sure you’re not leaving money on the table. As always, consult a trusted tax professional for personalized advice.

Stay tuned to Readovia for more essential financial updates and smart money insights all year long.