2025 is shaping up to be a pivotal year for taxes, with major tax changes on the horizon. Many of the tax provisions introduced under President Trump’s administration are set to expire at the end of 2025, which means tax rates, deductions, and reporting requirements could shift dramatically. Some provisions may be extended, while others may be altered or eliminated altogether. Here’s what you need to know about the upcoming tax changes that are already guaranteed for 2025.
1. New 1099-K Reporting Thresholds
Beginning in 2025, taxpayers receiving payments through third-party payment processors like PayPal and Venmo will see changes in reporting requirements. If you receive more than $2,500 in payments for business transactions, you will receive a 1099-K form. Previously, the threshold was much higher, but this adjustment will increase reporting obligations for many taxpayers.
2. Mandatory Cryptocurrency Reporting on 1099-DA
Starting in 2025, brokerage firms such as E-Trade, Charles Schwab, and Fidelity will be required to report digital asset transactions on a new form called the 1099-DA. This ensures that all cryptocurrency transactions are reported to the IRS, removing previous inconsistencies where some transactions were reported on a 1099-B and others were not.
3. Adjustments to Tax Brackets
While tax rates will remain the same, the income brackets will be adjusted for inflation. This means that the income thresholds for different tax brackets will increase, potentially reducing tax burdens for some individuals.
4. Capital Gains Tax Brackets
To qualify for the 0% capital gains tax bracket in 2025, your taxable income must be below the following limits:
- Married filing jointly: $96,700
- Head of household: $64,750
- Single: $48,350
Taxpayers exceeding these income levels will be subject to higher capital gains tax rates.
5. Standard Deduction Increases
Good news for taxpayers—standard deductions will be increasing in 2025:
- Married filing jointly: $30,000
- Single: $15,000
- Head of household: $22,500
Additional deductions apply for individuals aged 65 and older:
- Married (per spouse): +$1,600
- Single: +$2,000
- Head of household: +$2,000
Those who are blind or have disabilities may also receive additional deductions.
6. Increased Retirement Contribution Limits
Employees will see higher contribution limits for their retirement savings in 2025:
- 401(k) Contributions: Up to $23,500
- Catch-up Contributions (Ages 60-63): Additional $11,250
- Catch-up Contributions (Born before 1976): Additional $7,500
- SIMPLE Plans: Up to $16,500 (+$3,500 for individuals aged 50+)
- Roth IRA Contributions: Remains at $7,000 (+$1,000 for individuals aged 50+)
7. Increased Gift Tax Exclusion
The annual gift tax exclusion will rise to $19,000 per recipient in 2025. This means that a married couple can gift up to $38,000 per recipient without triggering the need for a gift tax return. The lifetime estate and gift tax exemption will also increase to $13,990,000, although this only impacts high-net-worth individuals.
8. Mileage Rate Adjustments
For those tracking mileage for tax purposes, the 2025 rates are as follows:
- Business travel: $0.70 per mile
- Military moves: $0.21 per mile
- Charitable travel: Fixed at $0.14 per mile
What’s Next?
While these major changes are confirmed, additional tax policy shifts could occur throughout 2025. Lawmakers may extend certain provisions or introduce new legislation that impacts tax rates and deductions. Staying informed and consulting with a tax professional will be crucial in navigating these upcoming adjustments.
At Thompson Tax Group LLC, we help real estate investors and small business owners stay ahead of tax changes. Contact us today to ensure you’re prepared for 2025 and beyond!
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