Major Tax Changes in 2025 Summarized

From Our “Ask a Question” Mailbag: “What are the major tax changes for 2025?”“

Revocable Living Trust Attorney Daniella Horn

Major Tax Changes for 2025 Including Some Updates.

Each year brings fresh hope for a better, brighter new year. And changes to the tax code.

What is new and exciting in the world of taxes? I am providing you with a short routine of five tax changes for 2025.

Increases Allowing You To Contribute More to Your 401(k)

Congress has authorized adjustments that allow you to contribute more to your employer-provided qualified plans. To learn more details, call your plan provider or financial advisor. The broad summary of changes include:

• In 2025, you can contribute up to $23,500.00 to your 401(k).
• If you are aged 60-63, you can add $11,250.00 to your 401(k) as a Catch-Up Contribution. For those over 50, the limit increased to $7,500.00.
• For those who use SIMPLE Plans,  the contribution caps rose to $16,500.00, including a special $5,250.00 catch-up for those aged 60-63.

Increases To the Gift and Estate Tax Exemptions

• Annual Gift Tax Exemption: Every person is allowed an annual gift amount to any number of people, which does not reduce their gift tax exemption. This annual gift, known as the Annual Gift Tax Exemption, adjusts annually for inflation. For 2025, the amount is $19,000.00. This means you can give each person on earth $19,000.00 and not report it to the IRS. You can also borrow your spouse’s $19,000.00 gift to that person if your spouse is not using it in 2025. This is a key element to almost every estate plan.
• Gift Tax Exemption: For gifts that do not fall under any exemption, every person is allowed to give away a certain amount in their lifetime free of Gift Tax. This “Gift Tax Exemption” is adjusted each year for inflation. For 2025, your Gift Tax Exemption is $13.99 million. If you are married, you BOTH have $13.99M, so you can give away about $28 million without tax as a team.

Charitable Gift Limits Increased

• IRA Gifts To Charity: For 2025, those aged 70 1/2 and older can now transfer up to $108,000.00 directly from your traditional IRA to a qualified charity. While these “Qualified Charitable Distributions” count towards your Required Minimum Distributions, they are NOT subject to income tax. This provides those with Traditional IRAs a way to use their IRAs in new ways to benefit their favorite charities.

Good News for Roth Those With Roth IRAs

• For those with Roth IRAs, the 2025 contribution phaseouts now apply to adjusted gross incomes of $236,000-$246,000 for joint filers and $150,000-$165,000 for single filers. Check with your plan provider and financial advisors, as this may provide you an excellent opportunity to invest for retirement.

Various Income Tax Changes

Congress and the IRS adjust parts of the IRS code each year. Be sure to talk to your CPA to see if any changes may benefit you. Here are some examples that may affect you:

• Standard Deduction Increases: Single filers now receive $15,000.00, Married filing jointly $30,000.00, and Head of Household $22,500.00.
• Earned Income Tax Credit (EITC):  Maximum increases to $8,046 for those with three or more qualifying children.
• Alternative Minimum Tax (AMT) Exemptions: Adjusted for inflation, for 2025, will be $88,100.00 for singles and $137,000.00 for married couples filing jointly.

In Conclusion, Major Tax Changes in 2025 Have Arrived.

I hope you found this short article about the Major Tax Changes in 2025. Contact us if you want to know more or have an estate that needs our help. Let our Probate and Estate Planning lawyers help walk you through what can be a confusing process. Feel free to contact our office for a free consultation. It’s All We Do: 

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It’s What We Do!

Peter Klenk, Esq. Pennsylvania Probate Lawyer, New Jersey Probate Attorney