The start of a new year marks the beginning of the 2025 tax filing season. With this tax season, we also get our first taste of the major tax changes made by the “One Big Beautiful Bill” that was signed into law in 2025.
Tax season often brings anxiety, but preparation is the best defense. To help reduce your stress, this guide offers practical steps to prepare for the 2025 filing season and explains the new deductions available to you.
1. Avoid These Common 2025 Tax Scams
The world of tax scams is constantly evolving. Scammers employ sophisticated tactics to deceive you out of money or sensitive personal information.
Remember: The IRS will never initiate contact with you by email, text, or social media. Your first contact from the IRS will always be by letter.
- Phone Scams: Criminals use “spoofed” numbers to pose as IRS agents, demanding immediate payment and threatening legal action.
- Phishing Emails & Fake Websites: Fraudulent links designed to steal your login credentials or Social Security number.
- Social Media & SMS Phishing: “Smishing” involves fake text messages claiming problems with your account to steal personal data.
- Refund Scams: Promises of “expedited” refunds in exchange for upfront fees.
The Consequences: Falling for these scams can lead to severe identity theft and financial loss. Always verify contacts before sharing information.
2. Organize Your 2025 Income Tax Documents
Gather all your 2025 tax documents early. Most employers and brokerage houses are required to send W-2s (wages) and 1099s (interest, dividends, capital gains) by January 31, 2026.
Key Note on Itemizing: For 2025, the State and Local Tax (SALT) deduction cap has increased significantly to $40,000 (up from $10,000). Because of this, we anticipate more clients may benefit from itemizing deductions this year rather than taking the standard deduction.
- 2025 Standard Deduction (Married): $31,500
- 2025 Standard Deduction (Single): $15,750
For THOR clients: Look for your tax organizer around February 1 to assist with gathering your information.
3. Maximize Your IRA and HSA Contributions
You have until April 15, 2026, to make contributions for the 2025 tax year.
- IRA Limits: If you are under 50, you can contribute up to $7,000. If you are over 50, the limit increases to $8,000.
- HSA Limits: Individuals can contribute $4,300 ($5,300 if over 50). Families can contribute $8,550 ($9,550 if over 50).
4. Major Tax Changes: The “One Big Beautiful Bill”
Some of the most significant provisions of the new legislation take effect for this filing season. Here are the relevant changes you need to know:
- Seniors: Those 65 and older are entitled to an additional deduction of $6,000 (subject to income limits), on top of the standard deduction.
- SALT Cap Increase: The cap on state and local tax deductions has increased to $40,000 for those making less than $500,000.
- Overtime Pay: A new deduction allows certain workers to exclude overtime income up to $12,500.
- Tips Received: Service industry workers can now deduct up to $25,000 in tips.
- Car Loan Interest: A new deduction of up to $10,000 is available for interest paid on car loans (must be for cars with final assembly in the US).
- Repealed Credits: The Clean Vehicle and Residential Energy Efficiency credits have been repealed.
File Early & Electronically
Filing early helps prevent fraud and gets your refund faster. The IRS will begin accepting 2025 returns in late January 2026. Note that paper refund checks are being phased out—most refunds must now be direct deposited.
Questions about the new tax laws? If you have questions about how these changes affect your portfolio, please call us at 513-271-6777.
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