Yearly Updates to Tax Laws and Policies

Staying informed about the latest changes in tax laws and policies is crucial for both individuals and businesses. Here’s a summary of the key updates for this year and how they might impact you.

Summarize Any Changes in Tax Laws That Could Affect Your Clients

1. Standard Deduction Increases: For tax year 2025, the standard deduction has increased to $15,000 for single filers and $30,000 for married couples filing jointly. This change can reduce your taxable income significantly if you do not itemize deductions.

2. Marginal Tax Rates: The top tax rate remains at 37% for single taxpayers with incomes over $626,3501. Other rates have been adjusted slightly, impacting various income brackets.

3. Earned Income Tax Credit (EITC): The maximum EITC for taxpayers with three or more qualifying children has increased to $8,0461.

4. Health Savings Accounts (HSAs): The annual deductible for self-only coverage has increased to $2,850, with a maximum out-of-pocket expense of $5,7001.

For a detailed list of all changes, visit the IRS website.

Explain How New Legislation Impacts Individual and Business Taxes

1. Individual Taxes:

   • Increased Deductions: Higher standard deductions mean more taxpayers will benefit from not itemizing, simplifying the filing process.

   • Tax Credits: Enhanced credits like the EITC provide more substantial financial relief for eligible taxpayers.

2. Business Taxes:

   • Qualified Business Income Deduction: Adjustments to income thresholds may affect eligibility and the amount of deduction businesses can claim.

   • Depreciation and Expensing: Changes in limits for expensing business assets can impact cash flow and tax planning strategies.

For a comprehensive guide on these updates, check out this informative video.

By keeping up with these yearly updates, you can better plan your finances and ensure compliance with the latest tax laws. If you need any help or are ready to file, give us a call at 832-972-7210. We’re here to assist you!