By Sheryl Parks, CFP®
Partner, Director of Financial Planning | Senior Financial Advisor
On July 4, 2025, sweeping new tax legislation was signed into law—bringing both permanent and temporary changes that will affect nearly every U.S. taxpayer starting this year and into the future. Whether you are a working individual or family, retiree, business owner, new parent, an employee earning tips or overtime, or looking ahead to estate planning, there are new planning opportunities (and some new limits) you need to know.
Many of the changes in the new legislation go into effect beginning in 2025, however other changes apply beginning in 2026. In addition, some changes are permanent while others are temporary.
The following table1 summarizes some of the important changes that could impact your financial and tax planning –
US Key Individual Tax Changes: What’s New Starting in 2025
| Provision | Effective Years | Details | Income Phaseouts or Limits |
| Permanent Rate Brackets & Inflation Boost | 2025+ | Keeps 10%, 12%, and 22% brackets permanent and adjusts for inflation using an extra year | Applies to all taxpayers |
| Standard Deduction (Enhanced & Permanent) | 2025+ | $31,500 MFJ, $23,625 HOH, $15,750 Single; adjusted for inflation | N/A |
| Elimination of Personal Exemptions | Permanent | Makes TCJA’s removal of exemptions permanent | N/A |
| Senior Deduction | 2025–2028 | Extra $6,000 for age 65+ Single (itemizers and non-itemizers), $12,000 MFJ | Phases out over $75,000 MAGI ($150,000 MFJ) |
| Child Tax Credit | 2026+ | $2,200 per child; adjusted annually | Phaseouts apply based on income |
| Mortgage Interest Deduction Limit | Permanent | $750,000 cap on principal mortgage | Applies to new and existing loans |
| SALT Deduction Cap Increase | 2025–2029 | Cap raised to $40,000 in 2025; increases 1%/yr through 2029; drops to $10,000 in 2030 | Phased out above $500,000 income |
| Itemized Deductions: Limitations Made Permanent | Permanent | Keeps limits on personal casualty losses, ends miscellaneous deductions (except educator expenses), moving expenses limited | Pease limitation restored |
| Value of Itemized Deductions Capped | Permanent | High-income filers can only deduct 35¢ per $1 | Applies to top tax bracket filers |
| Alternative Minimum Tax (AMT) | Permanent | Exemption increased; phaseout thresholds reset to 2018 levels ($500k Single / $1M Joint), indexed | Increased phaseout rate applies |
| Charitable Deductions Floor | Permanent | Beginning in 2026, creates a 0.5% AGI floor for itemized charitable contributions | Applies to itemizers |
| Above-the-Line Charitable Deduction | Permanent | $1,000 for Single / $2,000 for Joint Filers | Applies regardless of itemizing |
|
“Trump Accounts”
Tip Income Deduction |
Children born in 2025 – 2028
2025–2028 |
$1,000 deposit by Gov’t, permits Add’l $5k after-tax contributions allowed by parents and others, tax deferred growth
Deduct up to $25,000 of tip income |
N/A
Phases out at 10% rate over $150,000 AGI ($300,000 MFJ) |
| Overtime Deduction | 2025–2028 | Deduct up to $12,500 (Single) or $25,000 (MFJ) of premium overtime | Same phaseout as tip income |
| Auto Loan Interest Deduction | 2025–2028 | Deduct up to $10,000 interest on new U.S.-assembled cars | Phases out at 20% over $100,000 Single / $200,000 MFJ |
| Green Energy Tax Credits | Mostly repealed after 2025 | Ends EV and residential energy efficiency credits | Check specific repeal timing |
Estate & Gift Tax Updates
| Provision | Effective Year | Details |
| Estate & Gift Tax Exemption Increase | 2026+ | $15 million exemption for single filers, $30 million for joint filers, adjusted annually for inflation |
What’s Going Away
- Most Inflation Reduction Act (IRA) green energy tax credits will be phased out after 2025, including the popular EV and home energy efficiency credits.
- Many temporary deduction enhancements—such as tip, overtime, and auto loan interest deductions—expire after 2028, so plan to maximize these benefits while they last.
Planning Highlights
The new legislation has the potential to create both opportunities and limitations. It is always important to review your personal situation and consult with your tax advisor. A few highlights of the legislation to consider-
- Retirees & Seniors: Take advantage of the temporary $6,000 senior deduction between 2025–2028 if income limits allow.
- High-Income Earners: Be aware of new limits on how much of your itemized deductions you can actually use.
- Charitable Giving:
- Evaluate the potential for increasing charitable contributions in 2025, prior to the 0.5% AGI floor limitation beginning in 2026
- Even non-itemizers can deduct up to $2,000—plan your contributions accordingly.
- Estate Planning: Review your estate plan by 2026 to align with the expanded gift and estate tax exemptions.
Tax Planning is Important – We Can Help
Tax laws are changing, and that means your tax strategy should change too. From reviewing withholding to maximizing new deductions and planning charitable gifts, we can help you prepare to make the most of this new environment.
Your Marshall Financial Group advisor is ready to assist you in the tax planning process. Although we do not prepare tax returns and are not tax advisors, we work closely with many clients and their tax advisors to develop a strategic plan to achieve overall financial planning goals with efficient tax planning as an integral component.
Contact us today to schedule a review or planning session.
1 Source – https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/