We’ve reached the midpoint of 2025, and with it comes a fresh wave of important tax changes you need to know.
From IRS bracket adjustments to groundbreaking state-level reforms, staying informed now can save you money—and stress—later.
1. New Federal Tax Brackets and Standard Deductions
- Standard Deduction: Now $15,000 for single filers and $30,000 for married couples (up from $14,600 / $29,200).
- Bracket Adjustments: Tax brackets shifted upward to account for inflation—meaning you may fall into a lower effective tax rate. [IRS]
2. “One Big Beautiful Bill Act” – Major Federal Tax Overhaul
- Child Tax Credit: Temporarily increased to $2,500 per child through 2028.
- SALT Cap Raised: From $10,000 to $40,000 for taxpayers earning under $500,000. [Cooley]
- Tip & Overtime Tax Elimination/Deductions: New proposed deductions aim to reduce tax burden on working-class taxpayers.
- Business Incentives: Immediate expensing for R&D and equipment purchases. [MarketWatch]
Note: This legislation is still under Senate review.
3. Crypto Gets Formal Reporting – Meet Form 1099-DA
Starting this year, crypto exchanges must issue Form 1099-DA to report digital asset transactions.
If you trade crypto, keep records clean to avoid penalties. [H&R Block]
4. IRS Reductions May Cause Delays
The IRS has laid off 6,000–7,000 probationary staff members, sparking concern about potential processing delays and service slowdowns.
Be prepared to wait longer for correspondence and refunds. [Wikipedia]
5. State-Level Tax News: Major Shifts Across the U.S.
- Missouri: Eliminated state capital gains tax. Lawmakers are also debating a shift to a consumption-based system. [AP]
- New York: Approved income tax cuts, new child tax credits, and refund checks for lower-income residents. [NY Senate]
- Kansas: Eliminated the food sales tax—making groceries tax-free statewide. [Investopedia]
- Illinois: Enacted new taxes on sports betting and remote business income. [Journal Courier]
- Texas: Introduced property tax relief and larger homestead exemptions. [MySanAntonio]
6. Inflation-Adjusted Exemptions and Credits
- Foreign Earned Income Exclusion: Increased to $130,000.
- Estate Tax Exemption: Now $13.99 million.
- Gift Tax Exclusion: Increased to $19,000 per recipient. [IRS]
7. IRS Scrutinizing Key Credits
- Fuel Tax Credit: New documentation standards required.
- Other Withholding Claims: Under tighter review for abuse or error. [IRS]
Frequently Asked Questions (FAQ)
What does Missouri’s capital gains tax change mean?
Missouri now exempts capital gains from state income tax. This could make the state more attractive for investors and entrepreneurs—though it may also reduce state funding for public services.
How will IRS staffing cuts impact my taxes?
Fewer IRS agents may lead to processing delays for returns and communications. However, enforcement for serious issues like fraud will still remain a priority.
Is the “One Big Beautiful Bill” law yet?
Not yet. The House passed the bill, but the Senate has yet to finalize it. Provisions may change—stay tuned for updates or talk with your tax professional.
How does Form 1099-DA affect crypto users?
Exchanges must report your digital asset transactions to the IRS, making it easier for the agency to track gains/losses. Keep detailed records to avoid compliance issues.
What states are considered “tax-friendly” right now?
Missouri (capital gains), Delaware, Florida, Texas, Tennessee, South Dakota, and Wyoming are popular for low or no income tax. Kansas is now top for food tax savings.
Helpful Resources:
Amro Badran, EA, is the Managing Partner of Badran Tax,
With over 40 years of experience and accreditation as a Federal Enrolled Agent,
Amro Badran and his team of tax professionals specialize in helping individuals and businesses resolve complex IRS & state tax issues and controversies.
Experienced and Trusted Tax Resolution Firm based in New Brunswick, NJ.
Disclaimer
This blog post is provided for educational and informational purposes only.
It does not constitute tax, legal, accounting, or financial advice and should not be relied upon as a substitute for professional counseling tailored to your specific situation.
Always consult a qualified tax advisor or legal professional before making decisions based on this content.
Use of this site or information herein does not create a professional relationship between you and BadranTax LLC or its principals. Any reliance on the material is solely at your own risk.
While we strive to provide accurate, up-to-date information, BadranTax makes no warranties, express or implied, regarding accuracy, completeness, or suitability of the content.
Links to external websites are provided for convenience only. BadranTax does not endorse and is not responsible for the content or practices of third-party sites.
BadranTax and its affiliates expressly disclaim all liability for any actions taken or not taken based on this information.
