July 2025
We hope you are enjoying beautiful Central Oregon summer. For our summer update, we want to make you aware of several tax law changes we feel are relevant to many of our clients. The newly passed 2025 Tax Act (formerly referred to as the “One Big Beautiful Bill”) introduces some of the most sweeping federal tax changes in recent years. While the law is extensive, we’ve highlighted provisions most relevant to our clients below - organized by individual and business categories.
Please note: This is a high-level summary. Many provisions vary in their effective dates and include phase-outs, limits, or unique planning opportunities. It’s essential to assess how these changes impact your specific situation. We strongly encourage you to contact us soon to develop a tailored plan and ensure you're well-positioned to take advantage of new opportunities.
Individual Tax Highlights
Reduced Income Tax Rates
The lower individual tax rates and expanded brackets from the Tax Cuts and Jobs Act (TCJA) are now permanent, avoiding the previously scheduled increases in 2026. Below are the new 2025 brackets:
Rate
Single Joint Head of Household
10% $0–$11,925 $0–$23,850 $0–$17,000
12% $11,925–$48,475 $23,850–$96,950 $17,000–$64,850
22% $48,475–$103,350 $96,950–$206,700 $64,850–$103,350
24% $103,350–$197,300 $206,700–$394,600 $103,350–$197,300
32% $197,300–$250,525 $394,600–$501,050 $197,300–$250,500
35% $250,525–$626,350 $501,050–$751,600 $250,500–$626,350
37% $626,350+ $751,600+ $626,350+
Standard Deduction Increase
The standard deduction is permanently increased to $30,000 (joint), $22,500 (head of household), and $15,000 (single) for 2025, with further increases going forward. Since fewer taxpayers will benefit from itemizing - consider bunching deductions into alternate years.
Child Tax Credit
Permanently increased to $2,200 per qualifying child starting in 2025.
Estate & Gift Tax Exclusion
The federal exclusion increases to $15 million (indexed for inflation) for estates of decedents and gifts after December 31, 2025. Consider revisiting estate plans and timing gifts to take advantage of the higher exclusion.
New Individual Deductions (2025–2028)
Qualified Tips: Deduct up to $25,000, phased out at $150,000 Modified Adjusted Gross Income (MAGI) ($300,000 MFJ).
Overtime Pay: Deduct up to $12,500; subject to income limitations.
Age 65+ Deduction: $6,000 per qualified person; phased out over $75,000 (single) or $150,000 (joint).
Car Loan Interest: Deduct up to $10,000 annually for qualified newly assembled US vehicles; income phaseouts apply for MAGI over $100,000 and $200,000 for single and joint filers respectively.
Expanded Family & Education Benefits
Child & Dependent Care Credit: Increased to 50% of up to $3,000 for one qualifying individual and $6,000 for two or more individuals in eligible expenses, with Adjusted Gross Income-based phaseouts.
"Trump Accounts" for Children: You can contribute up to $5,000/year per child in tax-deferred accounts; the government will add $1,000 per account for eligible 2025 - 2028 births.
Expanded 529 Plan Uses:
K–12 Expenses: Limit raised to $20,000/year; now includes books, tutoring, therapy, and more.
Postsecondary Credentials: 529s can fund non-degree certificate/licensing/apprenticeship programs.
Business Tax Highlights
Qualified Business Income (QBI) Deduction
Made permanent. Minimum deduction of $400 for “applicable taxpayers” with at least $1,000 in aggregate active QBI in 2025 with inflation adjustments in future years. Phase-in thresholds increased to $75,000 (single) and $150,000 (joint).
Bonus Depreciation
100% bonus depreciation is now permanent for eligible property acquired after January 19, 2025. An additional provision applies to “qualified production property” placed in service after July 4, 2025 (QPP - is certain non-residential real property used in the manufacturing, production or refining or certain tangible personal property).
Section 179 Expensing
Limits raised to $2.5 million with a phase-out threshold at $4 million for property placed in service after 2024 and subject to inflation adjustments in future years.
Information Reporting Changes
Form 1099-K: Thresholds revert to $20,000 and 200 transactions (retroactively).
Forms 1099-NEC and 1099-MISC: Threshold increases to $2,000 for payments made after 2025.
As always, please feel free to reach out with any questions or planning specific to your situation.
