Core Insights - The article discusses various strategies for taxpayers to save on their taxes, particularly in light of recent changes under the One Big Beautiful Bill Act (OBBBA) that will affect tax returns filed in 2025 and beyond Group 1: Tax Filing Strategies - Taxpayers need to decide whether to itemize deductions or take the standard deduction, with the standard deduction amount increasing for tax year 2025 due to the OBBBA [2][3] - The OBBBA made the increased standard deduction permanent, which has led to a significant decrease in the number of taxpayers itemizing deductions, dropping from about one-third to less than 10% [4] - An estimated 5 million additional taxpayers are expected to itemize in 2025 as a result of the new law [4] Group 2: Deductions for Seniors - A new deduction for seniors aged 65 and older allows for an additional $6,000 deduction on top of itemized or standard deductions, applicable per person [5][6] - The deduction phases out for individuals earning over $75,000 or married couples filing jointly earning over $150,000 [6] Group 3: State and Local Taxes (SALT) - The OBBBA increased the SALT deduction limit from $10,000 to $40,000, potentially making itemizing more beneficial for many taxpayers [7][9] Group 4: Tips Deduction - Starting in 2025, certain workers can deduct up to $25,000 in tips, with the deduction phasing out for those earning more than $150,000 [10][11] Group 5: Charitable Contributions - Beginning in the 2026 tax year, taxpayers can deduct $1,000 in charitable donations even if they take the standard deduction, a change that may benefit those who donate to charities [13][14] Group 6: Investment Losses - Taxpayers can offset capital gains with investment losses, with a limit of $3,000 for single filers, and losses can be carried forward to future tax years [14][15] Group 7: Health Savings Accounts (HSA) - Contributions to HSAs can reduce taxable income and are made with pre-tax dollars, with specific contribution limits based on individual and family plans [16][17][18] Group 8: Retirement Accounts - Contribution limits for 401(k) plans are set at $23,500 for 2025, increasing to $24,500 for 2026, with additional catch-up contributions available for those aged 50 and older [19][20] - Taxpayers can contribute to traditional IRAs until April 15, 2026, for the 2025 tax year, with limits of $7,000 for 2025 and $7,500 for 2026 [20][21]

Core Points - The One Big Beautiful Bill Act introduces a new tax break for retirees aged 65 and over, increasing the standard deduction by $6,000, allowing married couples to deduct an additional $12,000 from their income tax [2][3] - The Trump Administration's tax changes allow single filers aged 65 and over to deduct $23,750 and married joint filers to deduct $46,700, provided they meet income limits, with these tax breaks lasting until 2028 [3] Impact on Social Security - The Center for Retirement Research warns that the new tax break could negatively affect the fiscal condition of Social Security, moving the trust fund depletion date from Q3 2034 to Q1 2034 [4][6] - Although the tax break does not change the rules for taxing Social Security benefits, it reduces taxable income significantly, potentially lowering or eliminating Social Security tax for many seniors [7][8]

Core Insights - The article discusses the impact of tax deductions on taxable income and highlights the importance of choosing between standard deductions and itemizing deductions for maximizing tax benefits [1][2][3] Standard Deduction - Approximately 91% of U.S. taxpayers utilized the standard deduction in 2023, making it the most common tax break [2] - The standard deduction has nearly doubled since 2018 and now adjusts for inflation, providing significant tax relief without the need for itemization [3] - For taxpayers aged 65 and older, a new "senior bonus" deduction of up to $6,000 (or $12,000 for married couples) is available, which phases out at modified AGI levels of $75,000 for individuals and $150,000 for married couples [4] Above-the-Line Deductions - Certain deductions can be claimed even without itemizing, known as "above-the-line" deductions, which reduce gross taxable income [5] - Contributions to traditional IRAs and 401(k)s can significantly lower taxable income, with potential reductions exceeding $20,000 for high earners [6][7] - Health Savings Account (HSA) contributions offer a triple tax advantage and are expected to have expanded eligibility starting in 2026 [9][10] - Taxpayers can deduct up to $2,500 in student loan interest, but this deduction phases out for higher earners [11][12] Itemized Deductions - Itemizing deductions is beneficial primarily for those whose total itemized deductions exceed the standard deduction thresholds of $15,750 for single filers and $31,500 for married couples [13] - The state and local tax (SALT) deduction cap has increased to $40,400 for the 2025 tax year, significantly benefiting homeowners in high-tax states [16][19] - Mortgage interest deductions remain valuable, especially with the recent reinstatement of deductibility for private mortgage insurance (PMI) [20][21] - Charitable donations can be deducted if itemized, with new rules allowing standard deduction filers to deduct up to $1,000 for cash donations starting in 2026 [23][25] Medical Expenses - Medical expenses are deductible only if they exceed 7.5% of adjusted gross income, making it a challenging deduction for many [26][27]

Core Insights - The "One Big Beautiful Bill" Act introduces significant changes to tax rules, including permanent extensions of provisions from the 2017 Tax Cuts and Jobs Act (TCJA) [1] Group 1: Standard Deductions - The standard deduction for 2025 is set at $15,750 for single filers and married couples filing separately, $31,500 for married couples filing jointly, and $23,625 for heads of households, with annual inflation adjustments codified into law [2] - The IRS has already announced the standard deductions for 2026: $16,100 for single filers and married couples filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of households [3] Group 2: Senior Deductions - Taxpayers aged 65 and older can claim an additional $6,000 deduction per person, allowing married couples to deduct up to $12,000 annually, with phase-out thresholds starting at $150,000 for married couples and $75,000 for single filers [4] - This new deduction creates planning opportunities for seniors, particularly regarding Roth conversions, as exceeding the income thresholds could increase tax liabilities [5] Group 3: SALT Cap Changes - The SALT deduction cap is temporarily increased from $10,000 to $40,000 for 2025, with a phase-out for high earners making $500,000 annually, and the cap will revert to $10,000 in 2030 [5] - The increase in the SALT cap has been characterized as a benefit primarily for higher-income individuals in high-cost states [6]

Core Insights - The article discusses the choice between taking the standard deduction or itemizing deductions for taxpayers, emphasizing the potential for significant savings depending on the option chosen [1][2]. Standard Deduction - The standard deduction is a fixed amount that taxpayers can subtract from their taxable income without needing to provide documentation [3]. - For the 2025 tax year, the standard deduction amounts are set at $15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of household, with increases for the 2026 tax year to $16,100, $32,200, and $24,150 respectively [3]. - This option is ideal for taxpayers with minimal deductible expenses, as it simplifies the filing process and requires no detailed record-keeping [4]. Itemized Deduction - Itemizing deductions involves detailing specific eligible expenses such as mortgage interest, medical costs, and charitable contributions, making it a more complex and time-consuming process [5]. - While most Americans opt for the standard deduction due to its simplicity, itemizing may be beneficial for homeowners, high earners, or those in high-tax states, especially with the SALT deduction cap increasing from $10,000 to $40,000 in 2025 [6].

Core Insights - The article discusses the benefits of Qualified Charitable Distributions (QCDs) for retirees, highlighting it as a tax-efficient way to donate to charity while reducing taxable income [2][5]. Group 1: Qualified Charitable Distributions (QCDs) - A QCD is a direct transfer from a pretax IRA to a qualified charity, allowing retirees to avoid taxable income that would otherwise affect their adjusted gross income (AGI) [2][3]. - Retirees aged 70½ or older can donate up to $108,000 through QCDs in 2023, with married couples able to each contribute this amount if both qualify [3]. - QCDs are particularly beneficial for retirees who do not itemize deductions, as 91% of filers opt for the standard deduction, meaning regular charitable donations do not lower their taxable income [4]. Group 2: Tax Implications and Requirements - QCDs provide a tax advantage as the donated amount is excluded from income, which is considered "better than a deduction" [5]. - Retirees aged 73 or older are required to take minimum distributions (RMDs) from their pretax retirement accounts, and failing to do so incurs penalties from the IRS [5].

Core Points - The IRS has announced changes to the 2026 tax brackets, which will impact taxpayers when they file their 2026 returns in 2027 [1] - Key changes include adjustments for inflation, an increase in the standard deduction, and modifications to the state and local tax deduction [1][4] Tax Bracket Adjustments - The phenomenon of "bracket creep" will lead to higher tax brackets for 2026 due to inflation, affecting both single and joint filers [3] - For single filers, the 2026 tax brackets will be as follows: - 37% for income over $640,600 (up from $626,350 in 2025) - 35% for income over $256,225 (up from $250,525) - 32% for income over $201,775 (up from $197,300) - 24% for income over $105,700 (up from $103,350) - 22% for income over $50,400 (up from $48,475) - 12% for income over $12,400 (up from $11,925) - 10% for income below $12,400 (up from $11,925) [3] - For joint filers, the 2026 tax brackets will be: - 37% for income over $768,700 (up from $751,600) - 35% for income over $512,450 (up from $501,050) - 32% for income over $403,550 (up from $394,600) - 24% for income over $211,400 (up from $206,700) - 22% for income over $100,800 (up from $96,950) - 12% for income over $24,800 (up from $23,850) - 10% for income below $24,800 (up from $23,850) [5] Standard Deduction Increases - The standard deduction will also see increases for the 2026 tax year, benefiting those who do not itemize deductions [5][6] - For single filers, the standard deduction will rise to $16,100 (up from $15,750 in 2025) - Head-of-household filers will see their deduction increase to $24,150 (up from $23,625) - Joint filers will have their standard deduction increase to $32,200 (up from $31,500) [6]

Tax Planning & Financial Implications - Understanding taxable income is crucial for predicting cash flow throughout the year [2] - Individuals should determine their tax bracket for better financial planning [2] - CNBC offers resources for obtaining more tax-related information [3] Tax Law Updates - Higher federal income tax brackets are anticipated next year due to inflation [1] - In 2026, the standard deduction will increase to $32,200 for married couples and $16,100 for single filers [1]

When you're trying to figure out your cash flow, it's important to figure out the tax hit that you can expect on your income. Next year, we're going to see higher federal income tax brackets based on inflation. And also in 2026, we'll see a higher standard deduction, $32,200 for married couples, $16,100 for single filers.Why is this important. Well, it's important to understand that the federal income tax bracket and the federal tax that you pay depends on what your taxable income is and that is the amount ...

Core Points - The One, Big Beautiful Bill Act (OBBBA) signed by Donald Trump introduces significant changes to the tax code, particularly affecting below-the-line deductions [1][2] - The OBBBA makes permanent the tax cuts from 2017 and introduces new relief measures, especially in terms of deductions [2][3] Tax Changes - The standard deduction has increased from $15,000 to $15,750 for single filers and from $30,000 to $31,500 for married/joint filers to account for inflation [4] - The State and Local Tax (SALT) deduction limit has been raised from $10,000 to $40,000, with a 1% annual increase until 2029, reverting to $10,000 in 2030 [4] Strategic Tax Planning - Taxpayers in high-tax states are advised to accelerate payments to maximize the $40,000 SALT cap, especially if their Adjusted Gross Income (AGI) is below the phaseout threshold [5] - Seniors are encouraged to consider Roth conversions or manage retirement distributions to qualify for the full senior deduction of $6,000, with income caps of $75,000 for single filers and $150,000 for married/joint filers [5] Deductions for Vehicle Purchases - The OBBBA allows a $10,000 auto loan interest deduction for qualifying vehicles assembled in the U.S., with a phaseout for Modified Adjusted Gross Income (MAGI) above $200,000 for married/joint filers and $100,000 for single filers [6]