Big Tax Changes for 2025: What Individuals & Small Businesses Need to Know
A major new tax law signed in July 2025 is bringing big changes that will affect both individuals and small business owners starting this tax year. Whether you’re filing solo or managing a business, here’s what you need to know—and how you can start planning now.
👨👩👧👦 For Individuals: Lower Rates, Higher Deductions, and New Perks
📉 Lower Tax Rates Made Permanent
The individual tax brackets introduced in the 2017 Tax Cuts and Jobs Act (TCJA)—with lower rates like 12%, 22%, and 24%—were originally set to expire in 2025. The new law makes them permanent, so most taxpayers will avoid a major tax hike.
💰 Higher Standard Deduction
For 2025, the standard deduction has increased to approximately:
$15,750 for single filers
$23,625 for heads of household
$31,500 for married couples filing jointly
This gives families and individuals more tax-free income—without needing to itemize.
👵 Bonus for Seniors
Taxpayers 65 and older get an additional $6,000 deduction through 2028. That’s $12,000 extra for married couples over 65. This is a huge win for retirees living on fixed incomes.
👶 Updated Child Tax Credit
Parents can now claim $2,200 per child under 17, up from $2,000. A portion remains refundable, offering relief to working families.
🧾 New Deductions for Everyday Workers
A few new deductions were introduced just for 2025–2028:
Up to $25,000 in reported tip income is now deductible
Up to $12,500 in overtime pay is also deductible
Up to $10,000 in car loan interest may be deductible for personal vehicles (subject to income caps)
🧑💼 For Small Business Owners: Bigger Write-Offs and Simpler Reporting
⚙️ Section 179 Expensing Doubled
Businesses can now deduct up to $2.5 million in equipment, software, and qualifying property in the year it's placed in service. The phase-out threshold also increased to $4 million—ideal for expanding companies.
🚛 Bonus Depreciation Returns to 100%
The phase-down of bonus depreciation has been reversed—meaning qualifying business assets (like computers, vehicles, and machinery) can be fully expensed in Year 1.
🧾 Qualified Business Income (QBI) Deduction Is Permanent
That 20% deduction for pass-through income from LLCs, S-corps, and sole proprietorships? It’s here to stay. Plus, the phase-out thresholds were expanded—more business owners will qualify.
📑 Relief from 1099 Overload
The 1099-K threshold (for reporting payment apps like PayPal, Venmo, and Etsy) is now $20,000 and 200 transactions—a relief for gig workers and casual sellers.
For 1099-NEC (used to report contractor payments), the threshold is increasing from $600 to $2,000 starting in 2026, easing the admin burden for small businesses with part-time or occasional help.
🌱 What This Means for You
This new tax law is designed to simplify and support both individuals and business owners. But there’s a catch: many of these changes apply only through 2028, so early planning is key.
📊 Whether it’s adjusting your withholding, investing in new business tools, or setting up a retirement plan to take advantage of these deductions, a smart strategy now means fewer surprises at tax time.
Need help understanding how these new rules apply to you?
📅 Let’s set up a tax planning check-in before the year ends.
We’ll help you take full advantage of every deduction and credit you're entitled to.
🧭 Tax Pros HQ: We’re here with you—every step of the way.
