September 9, 2025

Key Tax Law Changes for 2025 and Beyond

Clete Albitz, CFA, CFP®
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On July 4, 2025, Congress passed, and the President signed into law new tax legislation aimed at preserving several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while adding new tax benefits for individuals, families, businesses, and estates.

The law includes a mix of permanent and temporary provisions, meaning some changes will remain in place indefinitely while others are scheduled to expire in the coming years. Understanding the timing of these changes can help you plan more effectively.  Here are some of the key updates:


  • Federal income tax rates: Current tax brackets remain in place permanently, with annual inflation adjustments starting in 2026.
  • Standard deduction: Permanently higher—$15,750 (single), $31,500 (married filing jointly), $23,625 (head of household) for 2025, with inflation adjustments going forward.
  • Itemized deduction cap: Caps benefit of an itemized deduction to 35%, even if taxpayer’s higher marginal income tax rate exceeds 35%.
  • SALT (state & local taxes) deduction: Cap rises from $10,000 to $40,000 in 2025, increasing 1% annually until 2029, phasing out for those with modified adjusted gross income (MAGI) above $250,000 (single) and $500,000 (married filing jointly)
  • Alternative Minimum Tax: Higher exemption amounts made permanent—$500,000 (single) and $1 million (married filing jointly), indexed for inflation.
  • Child tax credit: Increased to $2,200 per child in 2025, indexed for inflation.
  • Charitable deduction for non-itemizers: Beginning in 2026, up to $1,000 (single) or $2,000 (married filing jointly) can be deducted without itemizing.
  • Charitable giving floor: Starting in 2026, individual taxpayers who itemize must exceed 0.5% of adjusted gross income (AGI) before any charitable donation qualifies for a deduction.
  • Extra standard deduction for those age 65+: An additional $6,000 for taxpayers age 65+ through 2028, phased out at MAGI above $75,000 (single) or $150,000 (married filing jointly).
  • Estate & gift tax exemption: Permanently raised to $15 million (single) and $30 million (married filing jointly) starting in 2026, indexed for inflation.
  • Qualified Business Income (QBI) deduction: The 20% deduction for certain pass-through businesses is now permanent.
  • 529 Plan expansion: Now includes professional certifications, licenses, and other credentials.  In addition, the annual K-12 tuition limit increases from $10,000 to $20,000 starting in 2026.

Other Temporary Deductions (Through 2028)

  • Tips: Deduction for qualified tips (up to $25,000) phases out above $150,000 income (single) or $300,000 (married filing jointly).
  • Overtime: Deduction for qualifying overtime pay up to $12,500 (single) and $25,000 (married filing jointly), with the same income phaseouts as tips.

This legislation creates a more predictable foundation for future tax planning while allowing for targeted strategies through 2028. It’s important to evaluate how these provisions fit your individual situation and to work with your financial and tax advisors to make the most of these provisions. 

All information is believed to be from reliable sources. However, we make no representation as to its completeness or accuracy. Cetera Wealth Services, LLC exclusively provides investment products and services through its representatives. Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services. This information is not intended as tax or legal advice.

Clete Albitz

CFA, CFP®

Clete Albitz joined Albitz/Miloe & Associates, Inc. in 2005 and is dedicated to serving clients, specializing in investment portfolio management and retirement income planning. Clete is a CFA® charterholder, CERTIFIED FINANCIAL PLANNER®, and graduated with a degree in Economics from the University of California, San Diego. He enjoys playing baseball, basketball, and coaching youth sports. Clete resides in the South Bay with his wife and their three children.

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