7/29/2025
Changes for Families and Workers.
Key changes affecting most working families:
Standard Deduction: The TCJA’s nearly doubled deduction is now permanent—and even slightly expanded in 2025:
- Single filers: ~$15,750
- Head of household: ~$23,625
- Married filing jointly: ~$31,500
Tax Brackets: The lower income tax rates (from the 2017 law) now never expire.
Child Tax Credit (CTC):
- Raised to $2,200 per child in 2025 and then indexed to inflation thereafter.
- Phase-in rules and eligibility tightened (e.g., SSN requirement).
Tips & Overtime Income Deduction:
- Up to $25K in tip income and $12.5K in overtime income can be deducted for workers earning below income limits. These expire in 2028.
Impact:
- Approximately a 7–16% tax cut for households earning under $50K. The biggest proportional gains go to those earning $15K–$30K (up to 21%).
- Average tax savings of about $2,900 per household in 2026, though most benefit flows to top 20% earners.
Additional Note: Families may also see indirect benefits, such as higher after-tax wages and easier budgeting thanks to simpler filing rules. Planning ahead with adjusted withholding could help maximize savings.
