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.
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.
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.
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:
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:
For families with children under 17, the Child Tax Credit remains an important consideration:
While this credit isn't adjusted for inflation in 2025, it still provides significant tax relief for families.
Planning for the future while managing today's expenses can be challenging, but increased contribution limits provide opportunities:
Even if you can't max out these accounts, contributing what you can helps to reduce your taxable income while building your nest egg.
If your employer offers a Flexible Spending Account (FSA) for healthcare expenses:
The AMT exemption amounts have increased:
This adjustment helps ensure middle-income families don't unexpectedly face this alternative tax calculation.
While perhaps less immediately relevant for many readers:
Not everything is changing. Understanding what remains the same can be just as important:
Personal exemptions remain eliminated for tax year 2025, as they have been since the Tax Cuts and Jobs Act of 2017.
There continues to be no limitation on itemized deductions for tax year 2025. However, with higher standard deductions, fewer taxpayers will benefit from itemizing.
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.
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.
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:
Remember, while taxes may seem complex, small adjustments to your financial habits throughout the year can make a big difference when tax season arrives.
While understanding basic tax changes is important, some situations may warrant professional help:
A qualified tax professional can provide personalized guidance based on your specific situation.
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.