Navigating Your 2025 Taxes: How to Position Yourself for Financial Success in 2026

As tax season is underway, many individuals and families are wondering how to best prepare for tax filing. With the passage of the Big Beautiful Bill in 2025, the tax landscape has shifted in meaningful ways. Several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) were made permanent, while new deductions and credits were introduced — creating opportunities for proactive planning.

Key Provisions of the Big Beautiful Bill

The 2025 legislation extended many TCJA provisions and added new tax benefits that affect most taxpayers. Understanding these updates can help you plan effectively and keep more of your income. *

Seven Tax Brackets Remain

The tax system continues with seven brackets, ranging from 10% to 37%.

Higher Standard Deduction

• $16,100 for single filers
• $32,200 for married filing jointly

These amounts will continue to adjust for inflation.

Additional Senior Deduction

Taxpayers age 65+ receive an additional $6,000 deduction.
Phaseout begins at:

• $75,000 income (single)
• $150,000 (joint)

Mortgage Interest Deduction– for individuals who itemize their tax deductions, and if the mortgage is being used to buy, build, or substantially improve a primary or secondary residence. In addition only the interest can be deducted from the mortgages.

The interest deduction cap is only on loan amounts of up to:

• $750,000 for joint filers
• $375,000 for single filers

State and Local Tax (SALT) Deduction

• Temporarily increased to $40,000 for single filers
• Reverts to $10,000 in 2030
• Married filing separately: $20,000, reverting to $5,000 in 2030

Gift Tax Exclusions

• The annual gift exclusion per recipient will remain at $19,000 per individual and $38,000 for joint marriage.

Lifetime Estate Tax Exclusions

• $15 million for single filers
• $30 million for married couples Both indexed for inflation going forward.

Child Tax Credit

Permanently increased to $2,200 per child beginning in 2025.

No Taxes on Tips or Overtime

You may deduct:

• Up to $25,000 in tips
• Up to $12,500 in overtime (or $25,000 joint filers)-applies only to the overtime differential—the extra amount you earn above your regular hourly rate—not your entire overtime paycheck.

Phaseout begins at:

• $150,000 income (single)
• $300,000 income (joint)

Smart Tax Moves to Make in 2026?

Understanding the new rules is only the first step — here’s how you can use them to your advantage.

The updated tax landscape creates several planning opportunities to support your financial goals and reduce your taxable income.

Make the Most of Tax Advantaged Savings

If you missed the opportunity to contribute to your IRA for 2025, there’s good news: you can contribute for the 2025 tax year up to April 15, 2026. In addition, there are other savings tools that may also provide tax benefits.

401(k)s – A 401(k) remains one of the most powerful tools for tax-advantaged retirement saving. Contributions to a Traditional 401(k) are made with pre-tax dollars, which can reduce your taxable income for the year and allow your investments to grow tax-deferred until retirement. A Roth 401(k), by contrast, is funded with after-tax dollars, offering the potential for tax-free withdrawals in retirement, provided you meet age and holding requirements.

IRAs – For the 2026 tax year, IRA contribution limits have increased to $7,500, or $8,600 for individuals age 50 and older. Traditional IRAs allow you to make pre-tax contributions, which may be deductible against your income, helping reduce your taxable burden today. Roth IRAs, on the other hand, are funded with after-tax dollars, offering the potential for tax-free withdrawals in retirement, provided you are at least age 59½ and the Roth account has been open for at least five years.

Determining whether a Traditional or Roth IRA/401k is the better fit depends on your income, tax bracket, and long-term financial goals. Our team can help you evaluate your options and choose the strategy that aligns best with your situation.

Health Savings Account (HSA) allows you to make tax-deductible contributions to cover qualified medical expenses if you’re enrolled in an eligible high-deductible health plan. For the 2026 tax year, contribution limits are $4,400 for self-only coverage and $8,750 for family coverage. If both spouses are covered under an HSA-eligible plan, each has their own HSA, and both are age 55 or older, they may each make an additional $1,000 catch-up contribution. In total, the maximum combined contribution they can make between their two HSAs is $10,750

Contribution Limits: 2025 vs. 2026