Important tax updates for 2025

The 2025 tax updates bring several changes that can impact taxpayers. Standard deductions increase by up to $800, offering more untaxed income for those who don’t itemize. Tax brackets rise by 2.8%, helping individuals avoid higher taxes due to inflation. AMT exemptions also increase, providing more relief for those subject to AMT. The Earned Income Tax Credit (EITC) rises to $8,046 for families with three or more children, while transportation benefits increase to $325. FSAs now allow contributions of up to $3,300, and Medical Savings Accounts see a 2.8% increase in limits. The Foreign Earned Income Exclusion rises to $130,000, and estate/gift tax exclusions also increase. Lastly, the adoption credit rises to $17,280, aiding families with adoption costs. These adjustments can help reduce taxable income and improve financial planning for many taxpayers.