Tax season can feel overwhelming, especially when new laws change how deductions work and who qualifies, but a few key updates for 2025 can help you plan ahead. Changes include adjustments to standard and itemized deductions, the elimination of personal exemptions, and a new deduction designed specifically for seniors. Knowing these updates early can make filing a lot smoother.

Standard Deduction

Under the Tax Cuts and Jobs Act (TCJA) of 2017, the standard deductions nearly doubled. While this was a great tax advantage at the time, it is scheduled to expire after 2025. Thankfully, the new legislation makes these higher amounts permanent. It is also important to note that these amounts are indexed for inflation, meaning they will continue to rise in future years.

2025 New Deduction Amounts

• $15,750 for Single Filers
• $23,625 for Head of Household
• $31,500 for married couples filing jointly.

This new deduction is in addition to the long-standing extra standard deduction for age or blindness.

Itemized Deductions in 2025: Key Updates

State and Local Tax (SALT) deduction:

• Temporarily increased from $10,000 to $40,000.
• Phases down for taxpayers with MAGI over $500,000 ($250,000 for married filing separately).
• Reverts to prior limit in 2030.

Limitation for high earners:

• Taxpayers in the top 37% of the federal bracket now receive only 35 cents of tax benefit per $1 of itemized deduction.

Charitable contributions:

• Pre-OBBBA: Full deduction allowed without thresholds or income-based limits.
• Starting 2026, only donations exceeding 5% of AGI are deductible for itemizers.

Casualty and theft losses:

• Only deductible if the loss occurs in a federally declared disaster area.

 Miscellaneous itemized deductions:

• Suspended for tax years 2018–2025 (includes unreimbursed employee expenses, investment fees, tax prep fees, etc.).

Mortgage interest:

• Deductible on acquisition debt up to $750,000 ($375,000 if married filing separately). The limit has been made permanent. Mortgage insurance premiums are again deductible (subject to AGI phaseout).

Home equity debt:

• Interest is not deductible unless the loan is used to buy, build, or improve the home.
• Loans or lines of credit for personal expenses no longer qualify.

Seniors Get a Special Deduction

A brand-new senior deduction provides up to $6,000 extra deductions for individuals 65 and older, and $12,000 total for married couples both over 65 years old. This benefit will be available from 2025-2028 and works whether you take the standard deduction or itemize. Like most of the other changes with deductions, there is a phase-out for higher earners. These deductions shrink by 6% of the excess income over $75,000 for singles and $150,000 for married couples. It is important to note that if you significantly exceed these thresholds, you may not qualify for these deductions.

Contact Us Today

These 2025 tax changes can have a meaningful impact on your deductions and overall tax strategy. Call us at 203-489-0612 to discuss how these updates apply to your situation and receive personalized guidance aligned with your financial goals.

Written by: Colin Speaker