tax law changes

ACA- Subsidies disappear at the end of 2025 unless they correct this and add them back during the government shutdown. October 31st is basically the deadline to get subsidies back for 2026.

Savings Account starts for new babies- Born 2025-2029 The Government will deposit $1000 for each child born in Trump Account. Really doesn’t start until July 4th, 2026 but can be applied for before then. Parents and family members can contribute up to $5000 per year tax free to the account. At age 18, the child can withdrawal the funds for education, home or business start venture. If the child waits until age 31, no restrictions for withdraw. ▪Create universal Trump accounts, allowing individuals to contribute up to $5,000 per year (indexed for inflation) for children under 18 ▪Must create the account prior the age of 8. ▪Pilot program would automatically create an account and deposit a one-time, $1,000 tax credit for qualifying children born during taxable years 2025-2028. ▪ appropriates $410 million, to remain available through Sept. 30, 2034, to fund Trump accounts.

Tax Free Tips- Tips up to 25K are tax deductible through 2028. Deduction phases out for taxpayers with AGI over $150,000 single or $300,000 joint filers. Tips must be reported on the W-2 or documented cash tip log.

No Tax on Overtime Pay-Tax free up to $12,500 (25,000 joint filers)▪The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 single/$300,000 MFJ and is only good through 2028. Must keep paychecks as proof.

Car Loan Interest deductions- up to $10,000 if income is under 80k through 2028. AGI phases out 100,000 (200,000 joint filers.) This is for cars purchased and has final assembly in the United States.

Child and Dependent Care- permanently increases the amount of the child and dependent care tax credit from 35% to 50% of qualifying expenses. ▪The credit rate phases down for taxpayers with adjusted gross income (AGI) over $15,000. ▪It will be reduced by 1 percentage point (but not below 35%) for each $2,000 that the taxpayer’s AGI exceeds $15,000. ▪The credit then be further reduced by (but not below 20%) 1 percentage point for each $2,000 ($4,000 for joint returns) that their AGI exceeds $75,000 ($150,000 for joint returns).

Child Tax Credits- increases the amount of the nonrefundable child tax credit to $2,200 per child beginning in 2025 and indexes the credit amount for inflation. ▪The $1,400 refundable child tax credit, adjusted for inflation is now permanent. ▪ makes permanent the income phaseout threshold amounts of $200,000 ($400,000 in the case of a joint return). ▪The $500 nonrefundable credit for each dependent of the taxpayer other than a qualifying child is now permanent.

IRS to Phase Out Paper Refund Checks

The IRS has announced that beginning September 30, 2025, it will begin phasing out paper refund checks for individual taxpayers.

(Full IRS release here)

This change, mandated by Executive Order 14247, is part of a broader push to move all refunds to secure electronic delivery methods whenever permitted by law. If the taxpayer refuses to enter direct deposit information, their refund can be held up to six months before sending pre-paid debit card.

No change in filing process: We will continue to file returns the same way. This announcement only impacts how refunds are issued.

• Refund delivery shift: Refunds will be sent by direct deposit, prepaid debit cards, or other authorized electronic methods. Paper checks will only be available in limited circumstances.

• Client guidance: Everyone needs to have a valid bank account or electronic payment option ready for refund delivery or they will receive a prepaid debit card in the mail instead of a check.

• Security & speed benefits: Paper checks are more prone to being lost, stolen, altered, or delayed. Electronic payments will be faster and more secure for your clients.

• Statistics to share: In the 2025 tax season, over 93.5 million individual refunds were issued. 93% went out via direct deposit, while only 7% were paper checks.

STANDARD DEDUCTIONS FOR 2025

Single 15,000

Married 30,000

Seniors over 65+ get a temporary bonus $6000 per person in Standard Deductions. This also has income limits: 75,000 Single 150,000 Married through 2028. This by no means is what was stated by the president as no tax on Social Security.

Snap & Medicaid Changes work requirements for those ages of 18-65 abled adults at least 80 hrs per month. Pregnant women, Parents caring for child under 14, medically unfit for work or part of recognized tribes are exempt from work requirements. Waiver limits are only valid until 2028 and may require volunteer work and lots more paperwork. There will be major cuts as well and many will no longer qualify for benefits. These do not start until 2026-2027.

Student Loan Changes Effective July 2026 Students will only be able to borrow $20,500 max per year with lifetime cap of $100,000.

Public Service workers have many changes from current and restrictions. Basically, a lot more paperwork.

Pell grants will only be awarded for trades and certificates or other short term programs.

Energy & Climate Credits currently have all been phased out. Including clean energy car credits, EV credits, Solar Credits and Energy Home Credits. However, there are many Fossil Fuel Credits added.

Business Lots of enhanced deductions including full equipment depreciation. Pass through deduction (20%) does not start until 2026. Buy new assets!

Business Car Mileage: Can take all actual expenses on business use vehicle including, Gas, Repairs & Maintenance and Insurance (must keep all receipts including gas receipts) or 70 cents per mile without any additional expenses for repairs and maintenance or insurance. All business vehicles will be able to deduct lic/tag renewal.

Expanded 529 Plans-▪Expands the definition of qualified 529 expenses to include costs beyond traditional college tuition. ▪This includes expenses like K-12 tuition, curriculum materials, tutoring, and even dual-enrollment fees for college courses taken in high school. ▪It also allows for the use of 529 funds for expenses related to postsecondary credentialing programs, such as those at trade schools or for certifications and licensing.

Update on BOI filing, a court decision has proven this filing to be unconstitutional, the mandate has been lifted effective March 2nd and you no longer have to file.

Starting in 2025 all businesses will need to file a new report called a Beneficial Ownership Information report. It is basically like our secretary of state in TN annual report, except this is on the federal level and at this point there is no payment due when filing. If you have a partnership, you must enter the information about each partner and upload a state issued ID for each member a long with their personal address and other information requested. It is up and running for 2024 but only required for new businesses formed in 2024. There are some that are exempt from filing as well and you can read all about it here https://fincen.gov/boi UPDATE: There was a lawsuit filed that said that this was unconstitutional and no we no longer have to file. I found this out 12/4/24 at 10pm EST. UPDATE again: You have until March 21st, 2025 to comply or you could face jail time and huge fines. Make sure that you have taken a picture of your ID or passport before starting the form. UPDATE yet again, you no longer have to file effective March 3, 2025.

Be sure to change your address for everyone who will send you tax documents. Tax documents WILL NOT forward.