Get Ahead on Your 2025 Taxes
The 2025 tax year brings new opportunities — and some complexities — under the One Big Beautiful Bill Act. The law made many temporary provisions permanent, added new ones set to expire in 2028 and adjusted energy-related credits. Leveraging these changes requires careful planning, but the effort you make now could affect your taxes for years to come.
Keep your records in shape
Tax deductions reduce the amount of your taxable income according to the percentage of your tax bracket for the year; tax credits give you a dollar-for-dollar reduction of your tax liability. In other words, tax credits directly reduce what you owe, so knowing which ones apply can make a big difference. Here are some credits available under the OBBBA:
Take advantage of available tax credits
Start with organization. Set up digital or physical folders for categories such as medical bills, charitable donations and business expenses. Up-to-date records make it easier to claim every deduction you deserve — and to substantiate them if the IRS asks.
- Saver's credit: Worth up to $1,000 ($2,000 for joint filers), this nonrefundable credit rewards contributions of new money (not rollovers) to retirement accounts. To qualify, you must be at least 18, not a full-time student and not claimed as a dependent. Beginning in 2027, the "saver's match" will replace this credit, providing a 50% government match (up to $2,000) deposited directly into your account.
- Earned income tax credit: The EITC is a refundable credit for eligible workers who meet income limits.
- Child tax credit: This credit is worth up to $2,000 per qualifying child under age 17; however, it begins to phase out when modified adjusted gross income exceeds $200,000 ($400,000 for joint filers).
- American opportunity tax credit: This credit offers up to $2,500 per student for the first four years of college — 100% of the first $2,000 in qualified expenses and 25% of the next $500.
- Lifetime learning credit: This credit provides up to $2,000 per return for tuition or job training expenses. It applies to undergraduate, graduate and professional courses and has no limit on the number of years it can be claimed.
- Energy-related credits: Rules and expiration dates for energy-related credits changed under the OBBBA. Because eligibility and timing can be tricky, consult a tax professional before making major energy-efficient purchases.
Review your retirement contributions
The contribution limit for 401(k) plans increases to $23,500 in 2025. Participants ages 50-59 and 64 and older can make $7,500 in catch-up contributions. The OBBBA created a larger catch-up amount for people ages 60-63; they may contribute up to an additional $11,250.
Individual retirement account limits remain unchanged from 2024: $7,000 for taxpayers under 50 and $8,000 for those 50 and older.
It is important to remember that if you can’t max out your contributions to a 401(k) or an IRA, contributing regularly still reduces taxable income and builds long-term savings.
Be strategic with charitable giving
Higher standard deductions — and the additional deduction for taxpayers over 65 — mean fewer people will be able to itemize this year, but there are still ways to make generosity affect your taxes positively:
- Bunch contributions. Combine multiple years' donations into one to exceed the standard deduction threshold.
- Use a donor-advised fund. Contribute a lump sum in one year, claim the deduction, and distribute grants over time.
- Make qualified charitable distributions. Taxpayers age 70 1/2 and older can direct up to $100,000 (possibly more in 2025, as the amount is now indexed for inflation) annually from their IRAs to charity, satisfying required minimum distributions without adding to taxable income.
Consider tax-loss harvesting
Selling investments that have declined in value can offset taxable gains elsewhere. You can deduct up to $3,000 in net losses per year, with any excess carried forward. This strategy works best when coordinated with your broader investment plan.
Look at the big picture
Tax law is rarely straightforward, and the OBBBA adds another layer of complexity. Itemizing, investing in home improvements or shifting retirement contributions can all affect future years’ taxes — and much guidance under the new law is still forthcoming.
A qualified tax professional can help you make the best choices for 2025 and beyond.
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