{"id":9635,"date":"2025-03-10T09:03:47","date_gmt":"2025-03-10T08:03:47","guid":{"rendered":"https:\/\/oxfordwisefinance.com\/blog\/?p=9635"},"modified":"2025-03-10T09:03:55","modified_gmt":"2025-03-10T08:03:55","slug":"irs-tax-changes-2025-discover-whats-new-this-year","status":"publish","type":"post","link":"https:\/\/oxfordwisefinance.com\/blog\/irs-tax-changes-2025-discover-whats-new-this-year\/","title":{"rendered":"IRS Tax Changes 2025: Discover What&#8217;s New This Year"},"content":{"rendered":"<div>\n<p>With most pandemic-era policy changes behind us, the 2025 tax season is shaping up to be a return to normalcy. According to <b>Brian Long<\/b>, a senior tax advisor at <b>Wealth Enhancement<\/b>, this year features &#8220;fewer major changes to the tax code&#8221; compared to significant years like 2018 and 2022.<\/p>\n<p>In general, filing your taxes \u2014 which are due by April 15 \u2014 should feel quite familiar, closely mirroring the process you followed last year. However, it&#8217;s essential to be aware of a few notable differences and quirks that could impact your filing experience this tax season.<\/p>\n<p>Here\u2019s a detailed look at the new developments for taxes in 2025:<\/p>\n<div class=\"ca-pcu-inline  has-ad-icon    money-embed-ca\" data-pcu-render-at-=\"2025-03-09T16:45:34Z\" id=\"ap35392-ww\">\n<div id=\"ap35392-ww-indicator\">\n<div id=\"ap35392-ww-indicator-wrapper\"><span id=\"ap35392-ww-text\">Ads by Money. We may be compensated if you click this ad.<\/span><span id=\"ap35392-ww-label\">Ad<\/span><span id=\"ap35392-ww-icon\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" alt=\"Ads by Money disclaimer\" height=\"16\" width=\"16\" src=\"https:\/\/i0.wp.com\/s3.money.com\/prd\/image\/image\/15240\/163e573e-202a-466a-b8b8-93da65db2b13.png?resize=16%2C16&#038;ssl=1\" \/><\/span><\/div>\n<\/div>\n<\/div>\n<h2>Understand the Updated Tax Brackets and Standard Deduction for 2025<\/h2>\n<p>Every year, the <b>IRS<\/b> makes adjustments to the tax brackets and the standard deduction to reflect inflation, preventing what is known as <b>bracket creep<\/b>. While the actual tax rates for 2024 \u2014 the taxes we are filing this year \u2014 remain unchanged, the thresholds for each income bracket have increased by 5.4%.<\/p>\n<p>To illustrate, in 2023, the lowest marginal tax rate of 10% applied to income up to $11,000 for single filers ($22,000 for married couples filing jointly). For 2024, the same 10% rate will now apply to income up to $11,600 ($23,200 for married filers).<\/p>\n<p>Additionally, the standard deduction has also seen an increase, rising from $13,850 for single filers in 2023 ($27,700 for married couples filing jointly) to $14,600 for 2024 single filers ($29,200 for married filers).<\/p>\n<p>These adjustments are beneficial as they allow taxpayers to protect more of their income from taxation, potentially resulting in larger refunds.<\/p>\n<h2>Expanded Opportunities: More Individuals Now Eligible for Free Tax Filing<\/h2>\n<p>This year, the federal government has significantly expanded the <b>Direct File<\/b> program, allowing many Americans to prepare and submit their federal taxes directly to the <b>IRS<\/b> at no cost. Last year, this initiative was in a testing phase with just 12 participating states; now, an estimated 30 million individuals in 25 states qualify to use it.<\/p>\n<p>(Recently, there was some confusion regarding whether <b>Tesla CEO Elon Musk<\/b> had &#8220;deleted&#8221; the initiative as part of efforts to reduce government spending, but it appears that Direct File is still operational.)<\/p>\n<p>Eligibility for Direct File includes residency requirements, income limits, and restrictions on the complexity of your tax return. If you do not qualify for Direct File, you can still benefit from the <b>IRS Free File<\/b>, which offers free guided tax preparation for taxpayers with incomes under $84,000 through well-known services. Alternatively, the <b>Free File Fillable Forms<\/b> option is available for those with some tax knowledge and no income limits.<\/p>\n<p>Additionally, third-party tax preparation companies also provide their own free filing options.<\/p>\n<h2>Key Changes to Tax Credits that Taxpayers Should Know<\/h2>\n<p><b>Lisa Greene-Lewis<\/b>, a certified public accountant and tax expert at <b>Intuit TurboTax<\/b>, notes that the maximum <b>earned income tax credit<\/b> has increased to $7,830 for 2024, reflecting a $400 increase from the previous year. Interestingly, the EITC, which has been around for 50 years, continues to be overlooked by approximately 1 in 5 eligible taxpayers, according to <b>IRS<\/b> statistics.<\/p>\n<p>Greene-Lewis highlights other notable tax credit changes, such as the adjusted mileage rate for self-employed filers, which now allows a deduction of 67 cents per mile driven for business travel \u2014 an increase of 1.5 cents from 2023. Furthermore, a new method for claiming the <b>electric vehicle tax credit<\/b> has been introduced, allowing buyers to claim up to $7,500 directly at the dealership, though this must be reconciled during tax filing.<\/p>\n<p>Moreover, while not a credit, it&#8217;s important to note that the <b>IRA contribution limit<\/b> has been raised to $7,000 for 2024 ($8,000 for individuals aged 50 or older). The deadline for contributions to your IRA for the 2024 tax year is April 15, giving you an opportunity to increase your retirement savings before Tax Day.<\/p>\n<div class=\"ca-pcu-inline content-width has-ad-icon    money-embed-ca\" data-pcu-render-at-=\"2025-03-09T16:45:34Z\" id=\"ap32123-ww\">\n<div id=\"ap32123-ww-indicator\">\n<div id=\"ap32123-ww-indicator-wrapper\"><span id=\"ap32123-ww-text\">Ads by Money. We may be compensated if you click this ad.<\/span><span id=\"ap32123-ww-label\">Ad<\/span><span id=\"ap32123-ww-icon\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" alt=\"Ads by Money disclaimer\" height=\"16\" width=\"16\" src=\"https:\/\/i0.wp.com\/s3.money.com\/prd\/image\/image\/15240\/163e573e-202a-466a-b8b8-93da65db2b13.png?resize=16%2C16&#038;ssl=1\" \/><\/span><\/div>\n<\/div>\n<\/div>\n<h2>Understanding the Ongoing 1099-K Reporting Changes for Online Sellers<\/h2>\n<p>The <b>IRS<\/b> has been gradually implementing new <b>1099-K reporting requirements<\/b> for online marketplaces and digital payment processors. While the threshold will eventually drop to $600, for the 2024 tax year, individuals earning more than $5,000 from selling goods or services on platforms like <b>StubHub<\/b> or <b>eBay<\/b>, and receiving payments through services like <b>Venmo<\/b> or <b>PayPal<\/b>, will receive a <b>1099-K form<\/b>.<\/p>\n<p>Although the actual taxation rules remain unchanged, the new documentation requirements have led to considerable confusion. Greene-Lewis emphasizes the importance for self-employed individuals and online sellers to approach this carefully.<\/p>\n<p>&#8220;Casual online sellers may receive a Form 1099-K, but they won&#8217;t owe taxes on the entire amount reported,&#8221; she clarifies. &#8220;It&#8217;s crucial to deduct the cost of the sold item from the sales price. Tax will only be levied on the profit made, not on the total proceeds.&#8221;<\/p>\n<p>For 2025, the threshold for receiving a 1099-K will decrease to $2,500.<\/p>\n<h2>Significant IRS Staff Reductions Under New Administration<\/h2>\n<p>Since taking office in January, President <b>Donald Trump<\/b> has prioritized reducing what he perceives as unnecessary federal expenditures. Recently, he initiated cuts at the <b>IRS<\/b>, resulting in approximately 7,000 employees being laid off, as reported by the <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/colleges-postpone-admissions-deadlines-due-to-fafsa-delays\/\">Washington Post<\/a><\/b>.<\/p>\n<p>Further staff reductions may be forthcoming.<\/p>\n<p>Given the current circumstances, many taxpayers are left wondering how these changes will impact the ongoing tax season. While definitive answers are limited, reports indicate that the Trump administration is scrutinizing recent <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/11-11-24-market-update-opening-bell-insights\/\">IRS hires<\/a><\/b>, which may have included expanded personnel for enforcement (such as audits) and customer support.<\/p>\n<p>Former <b>IRS Commissioner Chuck Rettig<\/b> stated that &#8220;there should not be a significant impact on current filing season operations,&#8221; yet he acknowledged that limited staffing and funding could reduce the number of examinations the <b>IRS<\/b> is capable of performing, potentially hindering the agency&#8217;s ability to address non-compliance.<\/p>\n<h2>Monitoring the Future of the TCJA Provisions<\/h2>\n<p>President Trump is advocating for the extension of several provisions from the <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/tax-impact-trump-vs-harris-and-your-wallet\/\">Tax Cuts and Jobs Act (TCJA)<\/a><\/b> set to expire this December. This law, enacted in 2017, fundamentally altered the tax landscape for Americans. However, it now faces challenges given the narrow majority the Republican party holds in Congress.<\/p>\n<p>While these legislative battles may not directly impact this year&#8217;s taxes, they represent a significant political struggle to watch closely.<\/p>\n<p>Looking ahead, &#8220;this is where we could see major shifts in taxation \u2014 particularly concerning higher itemized deductions allowed for state and local taxes, comparatively higher tax rates, and a halving of the standard deduction, all of which may occur without legislative action,&#8221; Long warns.<\/p>\n<div class=\"ca-pcu-inline content-width has-ad-icon    money-embed-ca\" data-pcu-render-at-=\"2025-03-09T16:45:34Z\" id=\"ap19684-ww\">\n<div id=\"ap19684-ww-indicator\">\n<div id=\"ap19684-ww-indicator-wrapper\"><span id=\"ap19684-ww-text\">Ads by Money. We may be compensated if you click this ad.<\/span><span id=\"ap19684-ww-label\">Ad<\/span><span id=\"ap19684-ww-icon\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" alt=\"Ads by Money disclaimer\" height=\"16\" width=\"16\" src=\"https:\/\/i0.wp.com\/s3.money.com\/prd\/image\/image\/15240\/163e573e-202a-466a-b8b8-93da65db2b13.png?resize=16%2C16&#038;ssl=1\" \/><\/span><\/div>\n<\/div>\n<\/div>\n<h2>Explore More Essential Tax Resources and Articles<\/h2>\n<p>Discover how to access <b>free tax assistance<\/b> from the <b>IRS<\/b> and other organizations.<\/p>\n<p>Learn about the <b>9 states<\/b> that are implementing <b>income tax cuts<\/b> in 2025.<\/p>\n<p>Find out how to effectively <b>track your tax refund<\/b> this year.<\/p>\n<\/p>\n<\/div>\n\n<p><a href=\"https:\/\/money.com\/tax-changes\/?xid=moneyrss\" rel=\"nofollow\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With most pandemic-era policy changes behind us, the 2025 tax season is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":9636,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","pagelayer_contact_templates":[],"_pagelayer_content":"","iawp_total_views":2,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[142],"tags":[50],"class_list":["post-9635","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-business","tag-news","col-md-12"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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