February 19, 2025
For the 2024 and 2025 tax years, individual taxpayers should be mindful of upcoming changes, especially with the scheduled expiration of provisions from the Tax Cuts and Jobs Act (TCJA) in 2026. Understanding how these changes may impact your tax liability is essential for strategic planning.
Income Tax Brackets & Capital Gains
For 2024, individual income tax rates remain between 10% and 37%, depending on filing status. Capital gains tax rates are set at 0%, 15%, or 20%, but higher-income individuals may also face an additional 3.8% Net Investment Income Tax.
Standard Deduction vs. Itemized Deductions
The standard deduction for 2024 is:
- $29,200 for married filing jointly
- $21,900 for head of household
- $14,600 for single filers
Itemized deductions, such as mortgage interest and charitable contributions, may offer better tax benefits depending on your situation. The state and local tax (SALT) deduction remains capped at $10,000, but this could change pending new legislation extending or expanding current TCJA provisions.
Charitable Giving Strategies
Donating appreciated assets like stocks can help taxpayers avoid capital gains taxes while still receiving a deduction. Additionally, Donor Advised Funds (DAFs) allow for large contributions in one year while distributing donations over time.
What to Watch for in 2025 and Beyond
- Tax Brackets: Without legislative action, tax rates will revert to pre-TCJA levels in 2026.
- SALT Deduction: The cap on state and local tax deductions may change.
- Child Tax Credit: Expected to revert to lower pre-TCJA amounts.
- Alternative Minimum Tax (AMT): Could become a concern for more taxpayers if TCJA provisions expire.
GRF Can Help
With potential tax law changes on the horizon, now is the time to consider tax-saving strategies like maximizing deductions, deferring income, and leveraging charitable contributions. Consult a tax professional to help ensure you’re taking advantage of available opportunities.
