The tax man is coming: Be aware of these 2025 tax updates


It’s that time again: Tax season is about to begin. It’s time for citizens and businesses to abide by the law and pay their taxes.

It’s also a time that brings a sense of dread for many.  

One way to alleviate some of that dread is to get an early start on tax preparation. If you haven’t already started planning for tax season, you should start now. Tax day is April 15, 2025. The IRS announced on Jan. 10 that tax season will start on Jan. 27.  

And if you don’t plan to hire a professional to prepare your taxes, part of that planning should include a review of 2025 tax changes that will take effect.

Tax bracket thresholds, the standard deduction, and the refundable portion of the Child Tax Credit all increased. 


And those are just some of the changes that will affect taxpayers. 

Some of the more significant changes

Various consequential tax law changes for 2024 will shape the fiscal tax year reflected on 2025 tax returns, according to TaxSlayer Pro. In addition to the increase in tax bracket thresholds and the increase in the standard deduction, there will be an increase in contribution limits for retirement accounts.     

Among some of the other changes were a drop in the 1099-K reporting threshold to $5,000; and an update in the earned income tax credit and adoption credit.

Income and tax filing status determine individuals’ tax rates. The updated rates and brackets for tax year 2024 (taxes filed in 2025) can be found online.

Other changes involve 2025 401(k) contributions and contributions to other retirement accounts. Individuals can contribute up to $23,000 to 401(k) plans, and more than that, up to $30,500, if they are 50 or older. The annual contribution limit for IRAs in 2024 is $7,000, and those 50 or older can contribute up to $8,000. 

In addition, they can contribute up to $3,200 in employee salary reductions to fund their health flexible spending arrangement, or health flexible spending accounts.

And here are some more details on changes to tax credits and deductions: The refundable portion of the child tax credit increased to $1,700, according to TaxSlayer Pro. Regarding the Social Security tax limit, maximum earnings for 2024 that are subject to the Social Security payroll tax increased to $168,600. 

Regarding the standard deduction, it has been increased to account for annual inflation. The standard deduction amounts for tax year 2024 (taxes filed in 2025) and for tax year 2025 (taxes filed in 2026) are:


Filing single: the 2024 standard deduction is $14,600 and the 2025 deduction is $15,000. For a head of household, the deduction for 2024 is $21,900 and for 2025 it’s $22,500. Married filing jointly: $29,200 for 2024 and $30,000 for 2025. Married filing separately: $14,600 for 2024 and $15,000 for 2025.  

Spreading the wealth

More changes are taking place for those looking to leave something to their heirs. The amount you can pass on without paying federal estate taxes — called the estate tax exclusion — is expected to increase to nearly $14 million per person. That’s an increase of $380,000 over 2024.

Those planning to give gifts will see an increase in the tax-free gift limit. That goes up by $1,000. People can now give up to $19,000 per person in 2025 without triggering any taxes.

Another change provides more breathing room for those managing trusts and estates. The starting point for the highest tax rate on those will increase slightly to $15,650.

Also on the gift-giving theme: Someone married to a non-citizen can gift him or her up to $190,000 tax-free. Expats will see some slight increases to the amount of tax-free gains they can claim when leaving the U.S.

Those are just some of various tax changes to consider. And if those weren’t enough, changes are coming for 2026, as well. The estate tax exclusion is set to be slashed in half unless Congress steps in. So 2025 might be the perfect time to do some smart estate planning while these higher limits are still in place.

A tax professional can help taxpayers sort through those. For more details on tax changes from the IRS, visit irs.gov.

“The Southern Bank is not a tax advisor and is not making recommendations.”

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