The information in this article is for educational purposes only and should not be considered tax advice. Please consult with a qualified tax professional about your specific situation.
Tax season may not always be top of mind, but staying informed about what’s ahead can make a big difference for your finances. At City & County Credit Union, we believe that being informed is the first step to financial empowerment. While major tax overhauls aren't on the horizon for 2025, several important adjustments are coming that could impact your family's finances.
Whether you're juggling childcare expenses, saving for college, or planning for retirement, these tax changes might affect your bottom line. Let's break down what's changing (and what isn't) in a way that makes sense for your busy life.
Key Tax Changes Coming in 2025
Standard Deduction 2025 Increases
Good news for those who don't itemize deductions (which is most Americans): the standard deduction is increasing for 2025. This means more of your income will be shielded from federal income tax.
| Filing Status | 2025 Standard Deduction | Increase from 2024 |
| Single | $15,000 | + $400 |
| Married Filing Jointly | $30,000 | + $800 |
| Head of Household | $22,500 | + Increase from 2024 |
For many families, this adjustment helps offset inflation and provides a small but welcome tax break.
2025 Tax Bracker Adjustments
While the seven federal tax rates remain unchanged (10%, 12%, 22%, 24%, 32%, 35%, and 37%), the income thresholds for each bracket have increased slightly for 2025. This means you can earn a bit more income before hitting the next tax bracket.
These adjustments are part of the IRS's annual inflation corrections, helping ensure that taxpayers don't face higher tax rates simply due to inflation-based income increases.
Online Income Reporting Changes
If you have a side hustle selling crafts online, renting a property, or providing services through apps, pay attention to this change:
Important: The threshold for receiving a 1099-K form has dropped to $5,000 for 2025 (down from $20,000 in previous years). This affects income received through platforms like:
- PayPal
- Venmo
- Cash App
- Etsy
- Other payment apps
This doesn't mean you'll pay more taxes — income has always been taxable regardless of whether you received a form. However, it does mean better recordkeeping is essential. Consider tracking:
- Business expenses
- Income by source
- Receipts for deductible items
Child Tax Credit 2025 Updates
For families with children under 17, the Child Tax Credit remains an important consideration:
- The maximum credit remains at $2,000 per qualifying child
- The refundable portion will be $1,700 for 2025
While this credit isn't adjusted for inflation in 2025, it still provides significant tax relief for families.
Important Tax-Advantage Accounts in 2025
Retirement Contribution Limits
Planning for the future while managing today's expenses can be challenging, but increased contribution limits provide opportunities:
- 401(k), 403(b), and 457 plan contribution limits increase to $23,500 for 2025
- Roth IRA contribution limits for 2025 remain at $7,000 for those under 50
- Additional catch-up contributions are available for those 50+
Even if you can't max out these accounts, contributing what you can helps to reduce your taxable income while building your nest egg.
Health Flexible Spending Account Updates
If your employer offers a Flexible Spending Account (FSA) for healthcare expenses:
- Contribution limits increase to $3,300 in 2025 (up from $3,200)
- This pre-tax money can help cover qualified medical expenses for you and your dependents
- Remember that most FSA funds must be used within the plan year (though some plans offer grace periods)
Alternative Minimum Tax (AMT) Exemptions
The AMT exemption amounts have increased:
- $88,100 for individuals (up from 2024)
- $137,300 for married couples filing jointly
This adjustment helps ensure middle-income families don't unexpectedly face this alternative tax calculation.
Annual Gift Exclusion Modifications
While perhaps less immediately relevant for many readers:
- The annual gift tax exclusion increases to $19,000 in 2025 (up from $18,000)
- This may be helpful for those receiving financial support from family members or planning intergenerational wealth transfers
What Stays the Same in 2025?
Not everything is changing. Understanding what remains the same can be just as important:
Personal Exemptions
Personal exemptions remain eliminated for tax year 2025, as they have been since the Tax Cuts and Jobs Act of 2017.
Itemized Deductions
There continues to be no limitation on itemized deductions for tax year 2025. However, with higher standard deductions, fewer taxpayers will benefit from itemizing.
Lifetime Learning Credits
The income limits for the Lifetime Learning Credit remain unchanged for 2025. This credit can help offset the costs of higher education for yourself or your dependents.
Important Note About Future Changes
Many provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means more substantial changes could be coming for the 2026 tax year — something to keep in mind for longer-term financial planning.
Helpful Tax Resources and Education
Understanding tax changes doesn't have to be overwhelming. At City & County Credit Union, we're committed to providing resources that help you navigate your financial journey with confidence:
- Free Financial Workshops: Join us throughout the year for educational sessions on tax planning and financial wellness (check our events calendar for upcoming dates)
- Personal Financial Checkups: Schedule a no-obligation review to see how tax changes might affect your overall financial picture
- Digital Resources: Access other resources like calculators, guides, and budgeting tools through our mobile app and website
Remember, while taxes may seem complex, small adjustments to your financial habits throughout the year can make a big difference when tax season arrives.
When To Seek Professional Guidance
While understanding basic tax changes is important, some situations may warrant professional help:
- Self-employment or side business income
- Major life changes (marriage, divorce, children, home purchase)
- Investment considerations
- Retirement planning
A qualified tax professional can provide personalized guidance based on your specific situation.
Get Tax Filing and Financial Planning Support From CCCU
At City & County Credit Union, we believe your money should work for your unique life journey. Understanding tax changes is just one way we help you make informed financial decisions. While we can't provide specific tax advice, we're here to help you navigate the financial aspects of your life with confidence.
Want to learn how these changes might affect your broader financial goals? Speak with our team about financial planning strategies that align with your personal situation.
Reminder: The information in this article is for educational purposes only and should not be considered tax or investment advice. Please consult with a qualified tax professional regarding your specific situation.