7/29/2025
New Tax Law Changes for Families and Workers.
Key tax 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.
08/06/25
New Perks for Retirees and Senior Citizens
Senior Deduction Bonus: For filers 65+, a temporary deduction of up to $6,000 is available (phasing out at higher incomes) through 2028. This deduction lowers taxable income but does not fully exempt Social Security benefits.
Standard Deduction and Marginal Brackets: Seniors benefit fully from higher standard deductions and permanent low tax rates just like other filers.
Impact:
Seniors with low-to-moderate income see more of their Social Security potentially untaxed due to the deduction, but Social Security itself isn’t exempted entirely.
Additional Note: This change may allow seniors to retain more of their retirement income, but those with higher investment earnings should still review how withdrawals affect taxable income levels.
08/13/25
Households in High-Tax or High-Cost States
Significant relief in states with high local taxes:
· SALT Deduction Cap Increase:
• Previously capped at $10,000, the deduction now rises to $40,000 for households earning under $500K. • This benefit phases out between $500K–$550K and expires after five years (reverts to $10K in 2030 unless extended).
· Charitable Deduction Permitted for Non-Itemizers: • Starting 2026, those taking the standard deduction can deduct up to $1,000 (single) or $2,000 (married) for charitable giving.
Impact:
· Families in high-tax states like New York or California see large itemized-deduction gains.
· According to JCT, 66% of the tax cut benefits go to families earning less than $500K—though actual dollars skew to higher earners.
Additional Note: This change may encourage more charitable contributions and help offset some of the financial strain for families who previously could not deduct their full property and income taxes.
8/20/25
Longer Term Savings & Benefits for New Parents and Growing Families
Longer-term savings and benefits for new and growing families:
- “Trump Accounts” / MAGA Savings Accounts: • For children born between 2025–2028, the government deposits $1,000 at birth. • Parents can add up to $5,000 a year, growing tax-deferred.
- Expanded Child Care & Dependent Credit: Some enhancements to existing child & dependent care credits are included, though most attention goes to the CTC bump and birth accounts.
Additional perks:
- The expanded CTC and new savings account may help lower middle-class families manage early child-rearing costs.
- Combined with higher standard deduction and tip/overtime deductions, young service-sector workers and parents gain extra take-home pay.
Additional Note: Families should explore setting up these accounts early to take full advantage of the tax-deferred growth, especially if they anticipate education or home-buying expenses in the future.
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