What’s Changed for Tax Year 2025

Greetings!
As we near the end of the year, I thought it would be a good time to introduce you all to a special client newsletter series concerning key 2025 tax changes (focusing on the One, Big, Beautiful Bill) and actionable, tax-planning steps you may want to take before the end of the year. After providing a general overview, each week, we will go in more depth about topics of interest while keeping readings brief and comprehensible; little snippets of the overarching picture at a time.

With the One, Big, Beautiful Bill Act (OBBBA) signed into law on July 4, 2025 (just some 4 months ago), we have been receiving many questions regarding changes that are applicable. It seems appropriate to open our series with these changes as they set a precedence for the following newsletters.

1. Tax Inflation Adjustments

Standard Deduction (for those who do not itemize):

Standard Deduction	Single; Married Filing Separately	Married Filing Jointly; Surviving Spouses	Heads of Households
TY 2024	$14,600	$29,200	$21,900
TY 2025      under OBBBA	$15,750	$31,500	$23,625
TY 2026      under OBBBA	$16,100	$32,200	$24,150

Income Tax Rates:

Marginal Rate	Taxable Income Range (Single)	Taxable Income Range (Married Filing Jointly)
22%	$48,476 – $103,350	$96,951 – $206,700
24%	$103,351 – $197,300	$206,701 – $394,600
32%	$197,301 – $250,525	$394,601 – $501,050
35%	$250,526+	$501,051+

• What does it mean to you?

If your taxable income (after the standard deduction) is $104,350, the $1,000 above the $103,350 “single” threshold is taxed at 24% while the rest is taxed in lower brackets.

• What can you do if your taxable income rises into a higher bracket?

You can bring your taxable income down by contributing that $1,000 to a retirement plan such as a 401(k), IRA, or Health Savings Account (HSA) so you save your $1,000 from the 24% tax.

2. Additional Deductions

For Personal Returns

• Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000 on top of their standard deduction. For example: A married couple, both age 65, would add an additional $12,000 to their $31,500 standard deduction.
• Taxpayers who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation). In addition, cash tips and gratuities received for services are not subject to federal income tax during this period.
• The state and local tax (SALT) deduction cap, for those who itemize, will increase from the previous $10,000 limit to $40,000 for 2025.
• Louisiana’s Tuition Donation Credit (TDC) Program allows Louisiana taxpayers to receive up to a 100% state income tax credit on donations made to approved School Tuition Organizations (STOs) that fund K–12 scholarships for low-income students. See the Louisiana Department of Education’s webpage on the TDC program for further detail.

For Business Returns and those concerned about “Venmo” type transactions

• OBBBA retroactively reinstated the reporting threshold so that third party settlement organizations are not required to file Forms 1099-K unless the gross amount of reportable business payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.

Please reach out if any of the items above strike you as worthy of discussion or if you have questions about how these changes impact your specific circumstances. I’m happy to coordinate a deeper dive. Additionally, if you have any other relevant topics of interest you would like to address, please email us with the areas of information you would like to further explore.

It seems very appropriate at this time of the year to express our most heart-felt appreciation to you for your faithfulness to our firm over the years. We are truly grateful for the opportunity to serve you and look forward to continuing our professional relationship.

Dan Johnson, CPA
832 E Boston St STE 15, Covington, LA 70433
(985) 893-4123
dan@danjohnsoncpa.com