Every year, the IRS releases inflation adjustments that affect multiple tax provisions. Given that we are reaching the end of 2025, it is important to be aware of these changes for 2026 as they affect most taxpayers. Some important changes include adjustments to the standard deduction, estate tax credits, and earned income tax credits.
Category: Tax Deductions
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2025’s One Big Beautiful Bill Act
With the passing of the One, Big, Beautiful Bill, there are many changes that will begin to affect taxpayers in 2025. The IRS has provided a comprehensive list on their website with some of the bill’s provisions. These items include tax inflation adjustments, the new senior deduction, no tax on tips or overtime, and more.
Do you think you may be affected? Click the link to learn more: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
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Tax Treatment of Interest on Student Loans
Student loans are a burden on many Americans, but thankfully there is a way to retrieve a portion of the money spent on the interest payments. For the interest on qualified education loans, the maximum deduction allowed for the taxable year is $2,500.
Single Filers
Full Deduction < $70,000
No Deduction > $85,000
Joint Filers
Full Deduction < $145,000
No Deduction > $175,000
Source: Fidelity.com
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Changes to 2023 Tax Deductions
The following annual adjustments are applicable to the 2023 tax year.
- Standard Deduction for married couples filing jointly: $27,700 (Up $1,800 from the 2022 tax season.)
- Standard Deduction for single taxpayers & married taxpayers filing separately: $13,850 (Up $900 from the 2022 tax season)
- Standard Deduction for head of households: $20,800 (Up $1,400 from the 2022 tax season.)
- Maximum Earned Income Tax Credit: $7,430 (Up $495 from the 2022 tax season.)
- Foreign Earned Income Exclusion for 2023: $120,000 (Up $8,000 from the 2022 tax season)
You can read more on irs.gov.
https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023