SouthJersey.CPA

This is a compilation of the federal tax changes for the 2025 tax year (for tax returns filed in 2026), grouped by topic.

1) Inflation-indexed amounts for individuals

• Standard deduction
  • Single: $15,300; Married filing jointly: $30,600; Head of household: $22,950.
• Section 179 expensing
  • SUV cap $31,300.
• Bonus Depreciation
  • 100% bonus depreciation applies automatically for qualifying purchases after 1/20/2025 unless opting out
• Qualified transportation fringes (monthly)
  • Transit $315; Parking $315.
• Health & cafeteria plans (FSA)
  • Health FSA salary-reduction max $3,300; permitted carryover $660.
• Standard mileage rates
  • Business: 70.0¢/mile; Medical/Moving (active-duty military): 21.0¢; Charitable: 14.0¢ (statutory).

2) Key credits (amounts & thresholds)

• Child Tax Credit (CTC)
  • Credit remains up to $2,000 per qualifying child; refundable ACTC cap = $1,700 for 2025. Phase-out thresholds unchanged: $200,000 single/$400,000 MFJ.
• Earned Income Tax Credit (EITC)
  • Max credits: $632 (no kids), $4,180 (1 child), $6,928 (2), $8,046 (3+).
• Adoption credit
  • Max $16,810; phase-out begins MAGI $252,150 and ends $292,150.
• Premium tax credit / ACA affordability
  • Employer shared-responsibility “affordability” percentage for 2025: 9.02% of household income (safe harbor).

3) Specialized accounts (HSAs, IRAs)

• Health Savings Accounts (HSAs)
  • Contribution limits: $4,300 (self-only), $8,550 (family); catch-up (55+) unchanged $1,000.
  • HDHP minimum deductible: $1,650 (self), $3,300 (family); OOP max: $8,300 (self), $16,600 (family).
• IRAs and retirement plan elective deferrals
  • IRA contribution limit: $7,000; IRA catch-up (50+) $1,000 (unchanged).
  • 401(k)/403(b)/most 457(b) elective deferral limit: $23,500; age-50+ catch-up $7,500.
  • Special SECURE 2.0 catch-up for ages 60–63 (plans that permit): $11,250 for 401(k)/403(b)/govt 457; $5,250 for SIMPLE.

4) Employer credits & mandates

• Work Opportunity Tax Credit (WOTC)
  • Available for hires through Dec. 31, 2025.
• Paid Family & Medical Leave Credit (§45S)
  • Extended through Dec. 31, 2025 (for qualifying employer-paid leave).
• ACA employer mandate affordability % (for 4980H safe harbors)
  • 9.02% of household income; applies to affordability tests for employer coverage offered in 2025 plan year.
• QSEHRA statutory caps
  • Annual max reimbursements: $6,350 self-only; $12,800 family.
• Fringe benefits
  • Qualified transportation fringes: $315/month transit, $315/month parking.

5) Retirement plan changes

• Mandatory auto-enrollment for new plans
  • New 401(k)/403(b) plans established after Dec. 29, 2022 must automatically enroll eligible employees for plan years beginning after Dec. 31, 2024 (i.e., 2025), with initial 3–10% deferral and annual auto-escalation to 10–15%.
    For 2025 plan years before final regs apply, good-faith compliance is accepted.
• Long-term part-time (LTPT) employee eligibility
  • Requirement shortens to 2 consecutive years @ ≥500 hours/year (formerly 3), effective plan years beginning after 12/31/2024 (i.e., 2025). Extends to ERISA-covered 403(b) plans beginning 2025.
• Higher catch-ups at ages 60–63 (“super catch-up”)
  • For 2025, catch-up limit is $11,250 (401(k)/403(b)/govt 457) and $5,250 (SIMPLE) for participants who attain age 60, 61, 62, or 63 in 2025. Separate “Roth-only catch-up for high earners” under §414(v)(7) was administratively delayed to 2026.
• Practical tax-prep effects for 2025 returns
  • W-2 box 12 elective deferrals may reflect higher $23,500 limit and, for ages 60–63, possible $11,250 catch-up.
  • New hires in auto-enroll plans may have unexpected deferrals affecting AGI and Saver’s Credit; ensure Form 8880 income limits are applied.

Quick reference: commonly-used 2025 amounts

• Standard deduction: $15,300 / $30,600 / $22,950 (S/MFJ/HOH).
• Mileage (business/medical/charity): 70.0¢ / 21.0¢ / 14.0¢.
• CTC refundable cap: $1,700 (credit still up to $2,000).
• EITC max (no/1/2/3+ kids): $632 / $4,180 / $6,928 / $8,046.
• HSA limit (self/family): $4,300 / $8,550; catch-up $1,000.
• IRA limit: $7,000; catch-up $1,000. 401(k) deferral: $23,500; regular catch-up $7,500; ages 60–63 catch-up $11,250.
• Health FSA max/carryover: $3,300 / $660.
• Transit & parking fringes: $315 / $315 (per month).
• QSEHRA caps: $6,350 / $12,800 (self/family).
• ACA affordability (4980H) for 2025: 9.02%.