There are many changes this upcoming year due to the OBBBA passed by Congress. This letter will briefly touch on the main points as there are almost 400 pages to the OBBBA. All of these changes are subject to income limitations. As always, for further information, contact us for details. MANY of these new rules do not yet have an answer of how they will be reported on your return. The IRS is “working” on it.
- There is an ADDITIONAL personal exemption deduction of up to $6000 for Single filers who are age 65 or older as of December 31, 2025 and up to $12,000 for MFJ filers if both taxpayer and spouse are age 65 or older as of December 31, 2025. Please note this provision is temporary, currently set to run through the year 2028.
- Changes not requiring itemizing your taxes:
o Tips can be deducted up to $25,000 (IRS rules coming soon)
o Overtime income can be deducted up to $12,500 (IRS rules coming soon)
o Interest on car loans can be deducted up to $10,000
o A charitable deduction of $1,000 ($2,000 MFJ) can be deducted without itemizing
Schedule A - Itemization of Taxes is back. The previous tax bill capped State and Local Taxes (SALT) at $10,000 and that cap has been increased to $40,000 (property taxes, state income taxes etc). You will need to supply us with copies of your 1098 Mortgage Statement and your Property Tax bills along with the amount of your STAR rebate for us to be able to determine if you can itemize. Contact your Town Clerk’s office if you need copies of your property tax bills. Also note that Gambling Losses are now capped at 90% of claimed winnings. Please include information for charitable donations (with dollar values) and out of pocket medical expenses. We will calculate your best options.
Other items of note:
- The child tax credit has been increased to $2200 per qualifying child under 17 years of age
- Child and dependent care expenses credit has been increased
- Clean vehicle credit has ended as of 09/30/2025
- Housing energy credits phase out after December 31, 2025
- Investment accounts can be set up for children when born without your children having wages
- Increased catch-up contributions for retirement accounts
- There are changes to the amount of Social Security you can receive if it was previously offset by a government pension (contact Social Security)
- If needed, you can pay your FEDERAL taxes via credit card (contact the IRS)
- There will no longer be paper refund checks issued by the government. More details coming
Businesses:
- The QBI deduction was made permanent
- Better depreciation rules for new assets
- Multiple payroll credits have been added (talk to your payroll provider)
Needless to say, this letter only hits the main points. Please contact us for further details if you have questions about your taxes this upcoming year.
SUNDAY APRIL 12TH IS OUR LAST DAY FOR TAX PREPARATION, YOU MUST SUBMIT ALL OF YOUR TAX DOCUMENTS TO US BY THIS DATE!!!
There will be a nominal fee increase this year. Please contact us with any questions. Your taxes will be filed when payment is received.
As always, Thank You and we look forward to serving your tax needs in the upcoming season.