As you start preparing documents to file your taxes, you must be up to date on the latest information. Navigating the 2025 tax season begins with considering the new adjustments in tax brackets and how they can affect you.
While tax returns aren’t due until the middle of April, the Internal Revenue Service (IRS) will accept submissions starting January 27. By taking a proactive approach and being informed and diligent in the 2025 tax season, you can optimize your financial outcomes and stay compliant with tax laws. Use this guide to find important information and confidently prepare for the new tax season.
It is essential to note the difference between tax year and tax season. The tax year is when you earn income, making you responsible for paying income taxes. For most individuals, the tax year aligns with the calendar year, from January 1 to December 31. Businesses may adopt a fiscal year that ends on a date other than December 31. The income you earn during that tax year is reported on your tax return for that specific year. For example, for the tax year 2024, you would report income earned from January 1, 2024, to December 31, 2024.
Tax season is the time to file your taxes for the last tax income year. It generally runs from January 1 until the tax deadline, which is April 15. During this period, you must gather the necessary documents, prepare your tax returns and submit them to the IRS. You may file an extension during the tax season, allowing you to submit your returns later, but you must pay any taxes owed by the original deadline to avoid penalties.
A tax bracket is the income range taxed at a specific rate in a progressive tax system, such as the federal income tax system. Higher income levels are taxed at higher rates or percentages, meaning the more you earn, the higher taxes you’ll likely pay. Each segment or bracket has its tax rate.
It’s also important to understand the marginal tax rate, which is the rate applied to the last dollar of income earned. For example, if your income falls into a specific bracket, only the income within that bracket is taxed at the higher rate. Income in lower brackets is taxed at their respective lower rates.
The 2024 tax brackets relate to income earned during the 2024 tax year. Taxpayers report this tax on the tax returns filed in the 2025 tax season. Below is the breakdown:
MARGINAL TAX RATES | SINGLE TAX BRACKET | MARRIED FILING JOINTLY | HEAD OF HOUSEHOLD | MARRIED FILING SEPARATELY |
---|---|---|---|---|
10% | $0–$11,600 | $0–$23,200 | $0–$16,500 | $0–$11,600 |
12% | $11,601-$47,150 | $23,201-$94,300 | $16,551-$63,100 | $11,601-$47,150 |
22% | $47,151-$100,525 | $94,301-$201,050 | $63,101-$100,500 | $47,151-$100,525 |
24% | $100,526-$191,950 | $201,051-$383,900 | $100,501-$191,950 | $100,526-$191,950 |
32% | $191,951-$243,725 | $383,901-$487,450 | $191,951-$243,700 | $191,951-$243,725 |
35% | $243,726-$609,350 | $487,451-$731,200 | $250,501-$626,350 | $243,701-$609,350 |
37% | Over $609,350 | Over $731,200 | Over $609,350 | Over $365,600 |
Use the 2025 income tax brackets to report your income for the 2025 tax year and file in the 2026 tax season:
MARGINAL TAX RATES | SINGLE TAX BRACKET | MARRIED FILING JOINTLY | HEAD OF HOUSEHOLD | MARRIED FILING SEPARATELY |
---|---|---|---|---|
10% | $0–$11,925 | $0–$23,850 | $0–$17,000 | $0–$11,925 |
12% | $11,926-$48,475 | $23,851-$96,950 | $17,001-$64,850 | $11,926-$48,475 |
22% | $48,476-$103,350 | $96,951-$206,700 | $64,851-$103,350 | $48,476-$103,350 |
24% | $103,351-$197,300 | $206,701-$394,600 | $103,351-$197,300 | $103,351-$197,300 |
32% | $197,301-$250,525 | $394,601-$501,050 | $197,301-$250,500 | $197,301-$250,525 |
35% | $250,526-$626,350 | $501,051-$751,600 | $250,501-$626,350 | $250,526-$375,800 |
37% | Over $626,350 | Over $751,600 | Over $626,350 | Over $375,800 |
Tax deductions can help to lower your taxable income, while tax credits are the dollars subtracted from your tax bill. If your credit is more than the amount of tax you owe and is refundable, you will receive a refund. Nonrefundable credits will only reduce your tax liability to zero. Potential deductions and credits you need to consider include:
A charitable contribution is a gift or donation to a qualified organization. Qualified organizations generally include nonprofit groups established for educational, religious, literary or scientific purposes. Taxpayers may deduct up to 100% of their charitable donations up to a maximum of 60% of their adjusted gross income (AGI) for the tax year. However, sometimes, 20%, 30% or 50% limits apply.
A tax credit is the amount subtracted from the taxes owed, whereas a tax deduction is an amount deducted from the income to reduce the tax liability. Businesses may claim several credits, including the following:
In addition to the tax credits, businesses can deduct expenses to reduce their taxable income. However, certain taxpayers, such as cannabis businesses, cannot deduct ordinary business expenses for purposes of federal income taxes. They can only deduct expenses for costs of goods sold (COGS).
Individuals may deduct medical and dental expenses incurred for themselves, their spouses and their dependents as long as the expense exceeds 7.5% of their AGI for the year. This deduction applies to those not compensated by insurance or otherwise. It does not matter whether you directly receive the reimbursement or payment is made on your behalf to the hospital or medical professionals.
Taxpayers with earned income who meet certain AGI and credit limits for the previous, current and upcoming tax years may claim the EITC. Earned income includes wages and taxable income earned from working for someone else, a business or yourself. For the tax year 2024, the maximum AGI and credit amounts are as follows:
Children or Relatives Claimed | Filing As Married Filing Jointly | Filing as Single, Married Filing Seperately, Head of Household or Widowed | Maximum Credit Amounts Based on Number of Qualifying Children |
Zero | $25,511 | $18,591 | $632 |
One | $56,004 | $49,084 | $4,213 |
Two | $62,688 | $55,768 | $6,960 |
Three | $66,819 | $59,899 | $7,830 |
The investment income limit is $11,600 or less.
The American Opportunity Tax Credit (AOTC) provides eligible students or their parents with credit for qualified education expenses spent on the initial four years of higher education. The credit covers the first $2,000 of qualified expenses at 100% and the next $2,000 at 25%. Each eligible student has a maximum annual credit of $2,500, but if the credit brings the tax balance to zero, 40% of the remaining credit may be refunded to the taxpayer, up to a maximum of $1,000.
The CTC applies to families who have qualifying children with Social Security numbers that are valid for employment in the United States. To qualify, the dependent child must meet specific criteria, including the following:
Married couples filing jointly have an income limit of $400,000 and $200,000 for separate filing. Taxpayers with higher incomes may be eligible for a partial credit.
This credit lets taxpayers offset some caregiving, daycare and babysitter costs for their dependents. To qualify, the care must enable you and your spouse, if filing jointly, to work or actively look for work. Also, you or your spouse, if filing jointly, must have lived in the U.S. for more than half the year. Special rules apply to military personnel stationed outside the country.
Staying updated on tax amendments is vital, whether you are filing as an individual or a business. The new tax rules can shape your financial strategies, influence your decision-making processes and impact your personal finances or corporate structures. Here are a few things to consider:
The standard deduction has increased to $14,600 for tax year 2024 for single filers and married people filing separately. For married people filing jointly, it has risen to $29,200. The standard deduction for heads of households is $21,900.
The AMT tax system helps to ensure that high-income taxpayers pay a minimum tax amount. High earners may need to use AMT rather than standard rules to calculate their tax obligation. For taxes due in 2024, the exemptions and phase-out amounts increased to:
Single filers | Married Filing Jointly | Married Filing Separately | |
---|---|---|---|
Exemption Amount | $85,700 | $133,300 | $66,650 |
Exemption Phase-out Amount | $609,350 | $1,218,700 | $609,350 |
401(k) and 403(b) contributions are not tax-deductible when filing. Because these contributions are made with pre-tax dollars, they’re already excluded from a taxpayer’s taxable income and don’t qualify for additional deductions.
Roth IRA contributions are not tax-deductible. Contributions to a traditional IRA may be tax-deductible. If you or your spouse are part of an employer-sponsored plan, your IRA deductions may be reduced based on your income:
In addition to the significant tax changes, there are several others to keep in mind. Here are some examples:
Remember, the deadline for filing your federal tax returns and making tax payments is April 15, 2025. If you request an extension, the last day to file taxes is October 15, 2025. Follow these steps to file your taxes accurately and smoothly:
You might need to gather a few forms come tax season. From your W-2 to various 1099s, you’ll likely have much to keep track of. Depending on your financial circumstances and activities, these forms and some additional ones may apply. While not all of these forms apply to every tax filer, common tax forms you might need include:
In straightforward cases, after processing your tax return, the IRS will issue your refund within 21 days. To avoid delays, ensure that your documents are accurate and transparent. Provide the correct personal information, deductions you want to claim and precise income reports.
To speed up your refund process, you can opt for e-filing or direct deposit to speed up your refund process. In-person filing and receiving your check by mail might cause additional delays. You can also monitor your refund status on the IRS website or mobile app.
Using a tax professional to help you file your taxes can give you peace of mind with comprehensive guidance. They can help ensure you adhere to tax laws and use all the relevant tax credits. A tax professional can also be beneficial in several other ways:
Tax professionals can provide valuable services in other instances as well. These include:
At Polston Tax, we understand that navigating the complexities of the tax system can be overwhelming. Our knowledgeable tax professionals are dedicated to helping you make informed decisions.
With years of experience, we stay on top of the latest tax laws and changes that could impact you. We can guide you on the critical deadlines and potential deductions and credits. We simplify complicated tax concepts, making them easy to understand.
We believe in transparency, integrity, and putting our clients first. We aim to empower you with the knowledge you need to navigate tax season confidently. Trust Polston Tax to be your reliable partner, guiding you every step of the way and ensuring you maximize your tax benefits. Let us help you achieve peace of mind this tax season!
Educate yourself about essential tax changes that may impact your filing before the 2025 tax season begins. You can streamline your tax filing process by organizing your financial documents, seeking professional guidance, and using the deductions and credits available.
If you need help filing your tax return or owe back taxes from unfiled returns or previous taxes, we can help. Since 2001, Polston Tax has offered small business tax accounting and resolution services. Contact us today for a free consultation or assistance with your 2025 tax season queries, or call us at 844-841-9857 for more information!
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