FAQ on 2025 tax law
1. What are the 2025 income tax brackets?
Rates remain 10–37%, but thresholds rose: e.g., 37% now starts at $626,350 (single).
2. When did the 2025 tax law take effect?
The “One Big Beautiful Bill” was signed into law on July 4, 2025. Most provisions—including SALT changes and Child Tax Credit updates—apply to tax year 2025, while others phase in later or run through.
3. Who qualifies for the expanded SALT deduction?
From 2025–2029, taxpayers with modified AGI up to $500K (single) or $1 M (joint) can deduct up to $40,000 in state and local taxes. Above those thresholds, the cap phases out until reverting to $10K for incomes ≥ $600K.
4. How does the Child Tax Credit work now?
In tax year 2025, the credit is $2,200 per child under 17, with up to $1,700 refundable—AS LONG AS both child and filer have valid SSNs. The credit phases out starting at $200K single / $400K joint AGI.
5. Are tip and overtime deductions included?
Yes—eligible tip workers can deduct up to $25,000 (single) or $50,000 (joint). Overtime earners get up to $12,500 (single) or $25,000 (joint). The IRS must issue occupation guidance by October 2, 2025.
6. What are the income limits for tip/overtime breaks?
Tip deductions phase out for individuals earning over $150K or $300K for couples. Overtime benefits exclude “highly compensated employees” (earning ≈ $160K+).
7. Can seniors still get extra deductions?
Yes—a new Senior Deduction provides up to $6,000 (individual) or $12,000 (couple), with phaseouts at higher income levels. However, these are temporary—2025–2028.
8. Will green energy credits change?
Clean energy incentives are being phased out mid-decade: solar credits end late 2025, EV purchase credits expire September 2025, and EV charger credits by mid-2026 .
9. What happens in 2026 and beyond?
Temporary provisions on SALT, tip/overtime, senior deductions, and car-loan interest expire between 2028–2029, while green energy phase-outs continue. Many benefits return to previous limits without future extensions.
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