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Important Tax Updates That Will Change After 2025

In the absence of Congressional action, 2026 will usher in significant tax adjustments, such as increased tax rates and reduced standard deductions. Anticipate substantial 2025 tax updates on the horizon, all attributed to the repercussions of the 2017 tax reform legislation.

Beginning in 2026, a significant number of individual tax provisions are set to revert back to the regulations implemented in 2017. These provisions, which are currently scheduled to expire after 2025, will require action by Congress to be extended beyond that point. Let’s delve into the essential provisions that are due to expire.

  • 2025 Tax Update 1. In the upcoming year of 2025, alterations are set to take place within the individual income tax brackets. tax rates will return to 10% ~ 15% ~ 25% ~ 28% ~ 33% ~ 35% ~ 39.6%.
  • 2025 Tax Update 2. We can expect to see significant increases in standard deductions in 2025. The legislation passed in 2017 led to a substantial doubling of these deductions, marking a significant shift in tax policy.
  • 2025 Tax Update 3. In the year 2025, the child tax credits have seen a significant increase compared to the amount set before 2018. The credit has now been raised to $2,000, up from $1,000.
  • 2025 Tax Update 4. In the tax reform bill of 2017, a change was made to the AGI (Adjusted Gross Income) cap for cash donations to qualified charities, boosting the limit from 50% to 60%.
  • 2025 Tax Update 5. In the current year of 2025, individuals benefit from a significantly increased estate and gift tax exemption.
2025 tax update

Some Restrictions on Well-Known Tax Deductions End After 2025.

  1. In compliance with current regulations, there are limitations on the tax deductibility of home mortgage interest can be tax deducted on up to $750,000, which is less than what was previously.
  2. Incorporated within Schedule A are various tax deductions that fall under the 2%-of-AGI threshold. The recent legislation of 2017 has removed this particular group of itemized deductions up to the year 2025. Among these are costs such as unreimbursed employee expenditures (covering travel, meals, education, etc.), fees associated with brokerages and IRAs, hobby-related expenses, and fees linked to tax return preparation.
  3. In the tax year 2025, individuals may claim tax deductions for theft and casualty losses from only the federally declared disaster area eligible for the tax deduction.
  4. In the upcoming year of 2025, two significant tax provisions set to expire were not present in the laws of 2017. One of these changes is the widening of eligibility for the Obamacare health premium credit, benefiting more individuals purchasing insurance through a marketplace. 

Additionally, the exemption from federal income tax on most student loan debt forgiven between 2021 and 2025 stands out as a departure from the usual tax treatment of canceled debts. Find your dedicated RapidTax Tax Professional to walk you through these new 2025 tax updated and provisions from start to finish.

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Preparing to File Taxes in 2025. Tax Filing Guide

This brief overview offers insight into the steps, timing for filing taxes in 2025 for tax return for individuals new to the tax-filing process or seeking guidance on filing independently.

A Step-by-Step Guide to Filing My Taxes in 2025

Navigating the world of tax filing can be overwhelming, even for those who typically exude self-assurance. The decision-making process can be complex for first-time filers, with questions arising about the most suitable approach: Is it better to attempt filing independently, opt for DIY software, or seek professional assistance?

No matter your stage, we aim to outline four key steps to assist you in managing your taxes effectively and simplifying the process of filing taxes for the year 2025.

1. Decide Which Taxes You Need to File in 2025

Determining if you need to submit a tax return for the current year is influenced by various factors such as your income, tax filing status, age, and other considerations. Additionally, your dependency status for tax purposes plays a significant role in this determination.

Should you find yourself not obligated to submit a tax return, there remains a compelling incentive to do so: the possibility of claiming a tax deduction that could result in a refund.

Individuals with lower incomes could benefit from exploring the earned income tax credit, a refundable tax credit that are designed to assist working families. Additionally, those who have dependents under 17 years old may qualify for the child tax credit, which offers a partial refund.

File Taxes in 2025 if:

  • If I am qualified for tax credits.
  • If I have any income tax withheld from my paychecks.
  • If I filed estimated tax payments or had last year’s tax refund applied to this year’s estimated tax.

2. Mark your calendar for 2025 Tax Deadlines and Dates

Understanding the various deadlines is essential for managing your taxes effectively. While mid-April marks the cutoff for submitting federal income tax returns for most people, there are numerous other key dates that require attention.

When Can I Begin to File My 2025 Taxes?

As of January 27, 2025, the IRS commenced its operations, signaling the initiation of receiving and handling tax returns for the 2024 tax year.

Begin getting organized with Rapid Tax now to position yourself at the forefront of the line when the queue becomes available. For instance, take advantage of the IRS Free File program for eligible taxpayers to access Rapid Tax starting on January 12.

When Do You Need to File Taxes in 2025?

Indeed, the main objective of the upcoming tax filing season in 2025 is to process tax returns for the year 2024. When the time comes, you must file your 2025 taxes by April 2026.

The deadline for submitting tax returns fell on April 15, 2024. If an extension was requisitioned by Tax Day, the deadline for your tax return would be extended to October 15, 2025. It’s important to note that tax extensions grant additional time to file your tax return but do not extend the deadline for paying your taxes.

Consider the possibility of needing to submit a state tax return as well. While the deadline typically aligns with the federal tax deadline, certain exceptions may apply.

3. Understand how your taxes are determined

When determining your tax liability, the government segregates your taxable income into distinct sections known as tax brackets. Each bracket is subject to a specific tax rate, ensuring that you pay a different rate on your entire income, regardless of which 2025 tax bracket you fall into.

In the United States, the tax system operates progressively, where individuals with greater taxable incomes face higher federal income tax rates. In comparison, those with lesser taxable incomes are taxed at lower rates.

Income taxes at the federal level represent just one component of the broader taxation landscape. In addition to federal income taxes, most states also levy income taxes, with the specifics varying based on factors like residency and location. Different states adopt different approaches to taxing income—some opt for a progressive system akin to the federal model, while others impose a flat rate. Notably, nine states, including Alaska and Wyoming, do not impose a state income tax.

4. Decide How to File your Taxes in 2025

File taxes online with Rapid Tax

Once you engage with Rapid Tax software, you are familiar with filing taxes online. Upon signing in, the system prompts you with inquiries related to your personal information, financial status, and earnings to assist in completing the necessary tax documents required by the IRS.

The cost of services may vary based on the level of intricacy in your tax return or the extent of assistance required. At Rapid Tax, a specialized and dedicated Tax Professional or Tax Help is available to guide you every step of the way.

Offering comprehensive software packages and support options, Rapid Tax provides access to knowledgeable tax professionals through on-demand, on-screen, or online platforms. Users can seek advice, have their returns reviewed, and even file taxes electronically with the assistance of these experts.

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Most Asked Questions about Refund Anticipation Loans (RAL)

What You Should Know About Tax Refund Anticipation Loans

On January 29, 2024, taxpayers will welcome the opening of tax season with mixed emotions. Some eagerly anticipate tax refunds, while others bear the weight of anxiety. In such situations, some taxpayers resort to seeking refund anticipation loans (RALs). Understanding the workings of these loans and the potential disqualifications is crucial. Here’s what you need to know.

Offered by certain tax preparers, an RAL (Refund Anticipation Loan) is a type of loan that taxpayers can opt for if they are anticipating a tax refund. It’s worth noting that this loan must be repaid, as it falls under a contractual agreement. By entering into an agreement with a lender, usually a bank, individuals can receive an advance on their projected tax refund in exchange for a commitment to repay the loan. One of the main advantages of an Refund Anticipation Loans RAL is quick access to cash, even if the tax refund itself is not disbursed for several weeks.

As Monday ushers in the start of tax season, receiving your tax refund immediately might not be possible. The law stipulates that the Internal Revenue Service (IRS) must wait until mid-February to distribute refunds to those who claim the Earned-Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).

Refund Anticipation Loans

Considering typical processing times for banks, as well as weekends and the upcoming President’s Day holiday, it is anticipated that the earliest refunds related to EITC and ACTC will be accessible on February 29, 2024. This is, of course, assuming that the refunds are made through direct deposit without any complications. Is worth mentioning that February 29, 2024, marks the final weekday of February. It is important to note that the recording on the IRS phone line advises taxpayers to expect these specific refunds to become available starting from the initial week of March.

In the process of facilitating RALs, the IRS maintains a clear separation. Lenders are not supplied with information by the IRS, nor are taxpayer tax refund amounts guaranteed. Consequently, every year, I am bombarded with inquiries regarding RALs.

Here’s a quick rundown of some of the most common, together with my answers:

If RAL was denied, does that mean I won’t get my tax refund?

Despite being coordinated or completed at the same location, keeping the Refund Anticipation Loans (RAL) application separate from the tax return preparation is necessary. Turning down the RAL will not impact your eligibility for a tax refund, as it will still be payable to you even if you have yet to receive any funds from the lender.

However, it is important to note that you might still find yourself responsible for various fees associated with loan applications, such as credit check fees and miscellaneous fees. This is a crucial aspect to consider when searching for a reliable RAL provider, as some may prioritize earning revenue from these charges rather than genuinely assisting you in obtaining the loan.

Why would I be denied of RAL?

When it comes to getting turned down for an RAL, there are a variety of factors that could come into play. One of the most frequent causes of this rejection is the lender deeming you too much of a risk.

When considering the size of your tax refund, you must be optimistic that it will cover the loan once interest rates, fees, and tax preparation fees are deducted. Otherwise, you must rely on your finances to cover the remaining amount. Furthermore, alterations in tax laws and offsets, where the government reduces your refund due to outstanding debts like child support or student loans, can impact your overall financial situation.

The lenders, banks, and tax preparers are now in the dark when it comes to the IRS, no longer providing them with the much-needed “debt indicator.” This indicator is used to give them an advanced heads-up on whether your refund had any portions earmarked for offset. With this crucial information gone, it becomes increasingly more work for lenders to gauge your bottom line accurately. As a result, they now have to rely on alternative criteria such as your credit history or salary to decide on whether to grant you a loan.

My Refund Anticipation Loan status says “Your application has been received but has not been accepted at this time.” What’s going on?

An RAL is subject to the lender’s due diligence requirements as with any loan. The level of due diligence may vary depending on the lender, ranging from a simple credit check to a more extensive process, particularly for larger loan amounts. If it has been several days since your application, it is worth seeking an update from the lender or the tax preparer who facilitated the loan.

Got denied for an RAL, will I got my tax papers back?

You can expect to have your documents returned to you, but the timing may vary. Your tax preparer may have a specific schedule for sending out copies of tax returns, and yours might simply not have been sent out yet.
In the event that this scenario arises, it would be wise to provide the individual in question with a brief period of time before taking further action. Nonetheless, it is within your rights to insist on promptly returning your information forms if the tax preparer fails to complete the necessary preparations. To learn additional strategies for handling an uncooperative preparer, get in touch with your dedicated Tax Professional to help you from start to finish.