2025 brings the largest set of tax changes since 2017, due to both inflation adjustments and the One Big Beautiful Bill Act. Tax year 2025 introduces new tax‑free categories (tips, overtime, car loan interest), expanded family credits, major new senior deductions etc. Essential elements of the changes include reducing tax rates for corporations and individuals andincreasing the standard deduction.

Deduction for seniors:

Effective tax year 2025 tax filers older than 65 years will get $6,000 additionally to the increased standard deduction. Single filer can deduct $23,750. A married couple, filing jointly and being both over 65, will get a total deduction of $46,700. The additional $6,000 begins to phase out for tax filers with modified adjusted gross income over $75,000 and it is completely gone at $175,000. For joint filers over 65, this phase out starts at $150,00 and is phased out entirely when the modified adjusted income is $250,000.

Tax filers using ITIN and no social security number must have in mind that these numbers can expire. Generally, any ITIN not used for 3 consecutive years will not be valid. In addition: ITIN’s having middle numbers 88 cannot be used for filing tax year 2025. Also ITINs with middle digits 70 through 87 have already expired and cannot be used anymore.

SALT (state and local taxes)

There is a big change in the itemized deductions giving the possibility to deduct up to $40,000 in state and local taxes including income, property and sales taxes, this is an increase from $10,000 to $40,000. However, the higher cap starts phasing out when the modified adjusted gross income hits $500,000 and disappears at $600,000.