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 article discusses important tax considerations for home buyers and sellers in 2025, particularly focusing on first-time buyers and the implications of recent tax law changes [1] Group 1: Tax Deductions for Home Buyers - Mortgage interest and property taxes are generally deductible, providing potential tax benefits for home buyers in 2025 [2] - The standard deduction for 2025 is set at $15,750 for single filers and $31,500 for joint filers, suggesting that itemizing expenses may be more beneficial for those with higher deductible expenses [3] - The "One Big Beautiful Bill Act" has increased the state and local tax deduction limit to $40,000, although this limit is lower for higher-income taxpayers [4] Group 2: Importance of Record Keeping - Maintaining excellent records for tax returns is crucial for home buyers, as emphasized by financial experts [5] - It is important to save all documents related to home purchases and mortgages, as well as receipts for home improvements, which can help reduce capital gains tax when selling the home [6] - The IRS considers substantial upgrades that improve the home's structure and livability as applicable for tax deductions, while normal wear and tear repairs do not qualify [7]

Core Insights - The Social Security program will see several changes in 2026, including a 2.8% increase in benefits, which translates to approximately $56 more per month for beneficiaries [4][10] - The increase in benefits is intended to help beneficiaries cope with rising costs, but experts believe it may not be sufficient for many seniors due to higher expenses they typically face [6][4] - A new tax deduction for seniors will lower their tax burden, allowing individuals aged 65 and older to deduct $6,000 from their taxable income [12][11] Benefit Payment Schedule - The first Social Security check of 2026 will be issued on January 2 for certain beneficiaries [1] - Retirement, spousal, and survivor benefits will be paid on January 14 for those born between the 1st and 10th of any month, January 21 for those born between the 11th and 20th, and January 28 for those born between the 21st and 31st [2] Economic Impact - The Social Security program is crucial for the U.S. economy, benefiting over 70 million Americans and driving consumer spending primarily on essentials like food, housing, and healthcare [3] Cost-of-Living Adjustment (COLA) - The 2.8% COLA for 2026 is based on inflation data from the third quarter of 2025 [4] - The increase in Medicare Part B premiums by 11.6% is expected to negate the benefits of the COLA for many seniors [5] Modernization Efforts - The Social Security Administration has transitioned to completely digital payments, ceasing the issuance of physical checks [7] - Staff reductions at in-person field offices are part of the modernization strategy, with a focus on improving phone support and online services [8][9] - While these changes aim to enhance efficiency and reduce costs, there are concerns about potential confusion for beneficiaries lacking access to technology [9] Proposed Legislative Changes - Proposed legislation could increase Social Security payments by $200 per month for the first half of 2026 to help seniors manage rising costs [14] - The current administration has indicated no plans to cut Social Security or raise the retirement age, but other changes could affect certain beneficiaries [15]

Core Insights - The upcoming tax season will serve as the first evaluation of the benefits from the Trump administration's tax law, referred to as the "One Big Beautiful Bill" [2][4] - Significant changes in tax deductions and credits are expected to lead to higher income-tax refunds for households, with projections suggesting an increase of up to $1,000 in refunds for 2026 [5][14] - The new tax law introduces various deductions, including those for overtime pay, tips, and a senior bonus, which create new planning opportunities for taxpayers [4][18] Tax Breaks and Deductions - Specific income limits apply for various tax breaks, such as $75,000 for individuals aged 65 and older seeking a $6,000 senior bonus deduction, and $500,000 for households wanting the full $40,000 state and local tax deduction [1][7] - The SALT deduction has quadrupled to at least $40,000 through 2029, which will lead to an increase in itemized deductions for 5 to 7 million additional households [10][14] - Taxpayers may need to "bunch" charitable contributions to maximize itemized deductions before the eligibility for such deductions decreases in 2026 [12][13] Refunds and Withholdings - The average tax refund for the current year was $3,052, and the upcoming tax season is projected to be the largest refund season ever [5][14] - Critics argue that larger refunds indicate overpayment of taxes throughout the year, suggesting that individuals should adjust their withholdings to avoid this situation [15][16] - Changes in withholding tables in 2026 may allow taxpayers to see the benefits of tax cuts reflected in higher take-home pay [17] State Tax Implications - States may not uniformly adopt the new federal tax changes, leading to a patchwork of state tax laws that could affect the application of new federal deductions [20][21] - Some states, like Michigan, have already aligned their tax laws with the new federal tax breaks, while others are still determining their approach [22] New Tax-Advantaged Accounts - The introduction of "Trump Accounts" allows parents to open tax-deferred accounts for children under 18, with a $1,000 seed contribution for U.S. citizen babies born between 2025 and 2028 [24][25] - While parents cannot claim a tax deduction for their contributions, there may be potential tax benefits depending on employer contributions and IRS regulations [25][26]

Group 1 - Out-of-pocket medical expenses are only deductible if they exceed 7.5% of adjusted gross income (AGI), and prepaying medical appointments could help exceed this threshold [1] - Charitable donations can be timed to maximize tax deductions by bunching several years of donations into one year, helping to clear the itemization limit [2] - Prepaying January mortgage payments can allow for interest deductions on the 2025 tax return, similar to property taxes [3] Group 2 - The standard deduction for 2025 has increased to $15,750 for single filers, $31,500 for married filing jointly, and $23,625 for head of household, making it beneficial to itemize if expenses exceed these amounts [4] - The end of the year is a critical time for making tax moves to increase refunds or reduce tax bills, with many credits and deductions having a December 31 deadline [5] - Correcting withholding errors before the final paycheck of the year can help avoid unexpected tax bills [6] Group 3 - Contributions to retirement accounts like traditional IRAs or 401(k)s can lower taxable income, providing immediate tax benefits [7] - The 2025 contribution limit for 401(k)s is $23,500 for those under 50, with catch-up contributions available for those over 50 [8] - Traditional IRA contributions can reduce taxes depending on income, while Roth contributions do not provide immediate tax benefits but allow for tax-free withdrawals in retirement [11] Group 4 - Health Savings Accounts (HSAs) allow tax-free contributions for medical costs, with limits of $4,300 for individuals and $8,550 for families in 2025 [12] - Flexible Spending Accounts (FSAs) require careful management as unused funds are typically forfeited, necessitating their use by December 31 [13] - Tax-loss harvesting can offset capital gains, but care must be taken to avoid the wash-sale rule [14][15] Group 5 - Adjusting tax withholding and estimated payments is crucial in the final weeks of the year to avoid underpayment penalties [17][18] - Self-employed individuals can manage their tax bills by timing income and expenses, such as deferring income until the next year [26] - Business expenses paid before year-end can reduce taxable income for self-employed individuals, with Section 179 allowing for significant deductions [25] Group 6 - Tax credits, such as those for energy efficiency improvements and electric vehicles, require action before the year ends to maximize benefits [34][36] - The American Opportunity Tax Credit and Lifetime Learning Credit for education expenses can provide significant savings if tuition is paid before year-end [37] - December is a crucial month for tax planning, with opportunities to boost refunds through strategic financial moves [39]

This deduction could significantly reduce tax bills for millions of tipped workers, but only if they maintain accurate records. One expert explains how you can ensure you get this tax break this year. https://t.co/hIvH59UiY3 ...

Core Insights - The number of seniors contributing to Social Security is increasing due to stagnant income thresholds since 1993, despite annual cost-of-living adjustments for benefits [1] - Eliminating taxes on Social Security could harm the program's financial stability, as it would significantly reduce government revenue and deplete trust funds [2][10] - Current tax deductions for seniors are limited and phased out for higher-income individuals, with a temporary $6,000 deduction introduced until 2028 [3][17] Taxation and Benefits - Social Security benefits are taxed for individuals with a combined income exceeding $25,000 and $32,000 for joint filers, which is considered low [4] - The share of Social Security benefits taxed at the federal level increased from 2.2% in 1994 to 6.6% in 2022, indicating a growing reliance on this revenue stream [5] - Approximately 50% of Social Security recipients currently pay federal taxes on their benefits, with projections suggesting this could rise to over 56% by 2050 [6] Financial Implications - Eliminating taxes on Social Security could lead to a $1.5 trillion reduction in government revenue over ten years and hasten the depletion of trust funds [10] - The depletion of Social Security trust funds is projected to occur by late 2032, with potential benefit cuts of 23% expected once funds run out [11][16] - Trump's promise to eliminate taxes on benefits could exacerbate cuts to 33% of benefits, highlighting the financial risks associated with such policy changes [16] Legislative Context - Lawmakers have not raised combined income thresholds for taxation on benefits, aiming to ensure a stable revenue stream for the program [7] - The One Big Beautiful Bill Act introduced a temporary tax deduction rather than eliminating taxes, reflecting the challenges in enacting significant changes to Social Security [17]

What do you need to know about tax planning in 2026? On this episode of Money Unscripted, learn about the new SALT cap increase, why you might want to consider itemizing over taking the standard deduction, a boosted child tax credit, and other opportunities to save on your taxes. Join host Ally Donnelly and Ajay Sarkaria, Fidelity Regional Vice President of Private Wealth Management, as they walk through the tax strategies that could help you keep more of what you earn. Watch now. 00:00 Welcome to Money Uns ...

A new $6,000 senior tax deduction in Trump's new tax bill, the One Big Beautiful Bill, starts in tax year 2025, offering potential savings for retirees 65 and older. https://t.co/4Mhusi84j5 ...

The last thing anyone wants to think about at year-end is taxes, but it’s the first thing you should think about, advisers say. President Donald Trump’s signature tax and spending package introduced significant tax breaks, with many retroactive to Jan. 1. Americans should take advantage of those, in addition to regular strategies to defer income and increase deductions, advisers say. Moves now can help lower your 2025 tax bill and set you up for an even more prosperous 2026, they say. “Tax planning is al ...