Summer Quarterly Newsletter 2025
President’s Message
This summer seems to be going by quickly. We hope that you and your families have been able to enjoy your summer so far. This newsletter is an important one as I am going to go through some of the new tax law changes that will affect tax year 2025 and 2026. As always, feel free to reach out to us with any questions you may have.
Big Beautiful Bill Tax Law Changes/Updates
I am sure that many of you know the Big Beautiful Bill passed on July 4th. There is a lot in the bill, and I will go through many of the changes/updates here.
Tax Year 2025:
- The standard deduction increased so now for those filing as single will be $15,750, head of household filers will be $23,625 and married filing jointly will now be $31,500.
- The cap on deducting state and local taxes on Schedule A will go from $10,000 to $40,000. There is an income phase out for this that begins at $250,000 for single filers and $500,000 for those filing jointly. This increase will be in effect through tax year 2029.
- The child tax credit will increase from $2,000 to $2,200.
- The maximum dependent care credit will increase to $1,050 (previously $600) for one child and for two or more children the maximum credit will be $2,100 (previously $1,200).
- Each taxpayer over the age of 65 will receive a $6,000 deduction. There is an income phase out that begins at $75,000 for single filers and $150,000 for those filing jointly. This deduction will end after 2028.
- Up to $25,000 of qualified tips will now be deductible. There is an income phase out for this deduction as well. This begins at $150,000 for single filers and $300,000 for those filing jointly. This deduction will end after 2028.
- Up to $12,500 of overtime pay is now deductible. The income phase out for this begins at $150,000 for single filers and $300,000 for those filing jointly. This deduction will end after 2028.
- For the first time in many years, auto loan interest is deductible. This write-off can be up to $10,000 and goes as an “above-the-line” deduction so you do not need to itemize. The requirements include the vehicle has to be new and the final assembly needs to be in the U.S. The income phase out for this begins at $100,000 for single filers and $200,000 for those filing jointly. This deduction will end after 2028.
- As of September 30, 2025, the up-to-$7,500 tax credit for buying an electric vehicle will expire.
- As of December 31, 2025, home energy improvement tax credits are going away. If you want to take advantage of this tax credit, this is the year to make those improvements.
Tax Year 2026:
- Those that do not itemize can deduct some of their charitable contributions. For single filers the deduction can be up to $1,000 and $2,000 for those that file joint returns. Itemizers will need donations to exceed 0.5% of their income before they can receive a charitable deduction.
- The childcare tax credits will max out at $1,500 for one child and $3,000 for two or more children. The dependent care FSA will increase from $5,000 to $7,500. In 2026, if you plan on having childcare of over $5,000 be sure to update the amount during your benefit enrollment period.
- You can open a “Trump Account” for kids under the age of 18. The annual maximum contribution can be $5,000 and can grow tax free. The savings account is a new way to pay for higher education, homeownership, or starting a new business. Under this account, each U.S. citizen born in 2025-2028 will be eligible to receive $1,000 in their Trump Account. There are other rules regarding distributions, how the funds are used, etc.
Tax Tips as we head into Fall
Now that we are more than halfway through the year, now is the time to start thinking about how you may be tracking on your withholdings/tax payments. We can help you with that. In light of the upcoming changes from the Big Beautiful Bill, we can calculate if you are on track with your withholdings or tax payments.
As I mentioned in the Spring Newsletter, making energy improvements to your home can provide you with some tax credits. These credits will be expiring at the end of this year.
Credit Card Processing
I wanted to let all my clients know that starting on September 1st, we are going with a new credit card processor. Normally this would not affect our clients however, this change will add a 3.5% fee for all payments paid via credit card. This will allow us to keep our overall tax preparation fees down for everyone. Normally, we increase our rates annually by an average of 5-7%. This change will allow us to reduce the increase by at least 2%.
Important Dates
· September 1, 2025, Labor Day - Office Closed
· September 15, 2025, Business Extension Deadline
· October 15, 2025, Individual Extension Deadline
· November 2, 2025, Daylight Savings Time Ends
· November 27-28, 2025, Office Closed for Thanksgiving