Expert Tax Services for Small Businesses

2025 Tax Updates | What’s New and What You Should Know

Higher Standard Deductions & Adjusted Brackets

For 2025, the IRS increased the standard deduction to:

$15,000 for single filers and married individuals filing separately
$30,000 for married couples filing jointly
$22,500 for heads of household IRS

Because of inflation adjustments, many tax thresholds, such as income levels for each tax bracket, the Alternative Minimum Tax (AMT) exemption, and other credits have also been raised.

New Deduction for Seniors (Age 65+)

Between 2025 and 2028, taxpayers who are age 65 or older can claim an additional $6,000 deduction, whether or not they itemize.

This deduction phases out for higher-income individuals (based on modified adjusted gross income).
It’s in addition to any extra standard deduction currently allowed for age or blindness.

“No Tax on Tips” Deduction (2025–2028)

A new provision allows eligible tipped workers to exclude up to $25,000 of tip income from federal income tax for 2025–2028.

The deduction phases out for higher-income taxpayers.
This applies only to federal income tax. Tip income remains subject to payroll taxes (Social Security, Medicare).

Retirement & Contribution Limit Increases

The 401(k) contribution limit has increased to $23,500 for 2025.
IRA limits remain unchanged (e.g. $7,000) in 2025.

What Clients Should Do / Watch

If you’re 65 or older, let us know, you may qualify for the new $6,000 deduction.
Review your withholding or estimated tax payments. With income changes, inflation, or new deductions, you may need to adjust to avoid surprises.
If you or your employees earn tip income, we should evaluate if the “No Tax on Tips” provision applies.
Check your retirement plan contributions, especially for 401(k), to maximize those limits legally.
Be aware that phaseouts and income thresholds have shifted upward. Even if your income is similar to last year, your tax bracket or eligibility for credits could be different.
tation in case of an audit. With our help, you can rest easy knowing that your tax affairs are in good hands.

Need help understanding Tax Brackets? You're not alone.

The IRS taxes income in steps, not all at once. Think of it like climbing a ladder — as your income goes up, each portion of your income is taxed at a higher rate, but only that portion.

If you’re single and make $60,000 in taxable income in 2025:
- The first $11,925 is taxed at 10%.
- The income between $11,926 and $48,475 is taxed at 12%.
- The income between $48,476 and $60,000 is taxed at 22%.
- That’s it. You don’t pay 22% on your whole $60,000, just on the slice that falls into that bracket.

So your effective tax rate (the average you pay overall) ends up being much lower than your marginal rate (the highest bracket you reached).