7 Upcoming Tax Changes You Need to Know!

1. Individual taxes will be going up. At the end of 2025, the individual tax rates are going to go back to the 2017 levels. The top tax rate will be going up to 39% from 37%.
2. Standard deductions are being cut in half at the end of 2025. Right now, if you’re married or filing jointly, you get a standard deduction of $26,000. That deduction gets cut in half, not only for those filing jointly but for individuals as well.
3. Pass-through deductions are going away. Right now, if you’re a pass-through business like a partnership or S Corp, you can take a 20% deduction off your income immediately before it passes through to your individual tax return. This is going away at the end of 2025.
4. Bonus depreciation is decreasing. You used to be able to depreciate a million dollars of your first year equipment, software or hardware. That number has gone down to 80% and next year in 2024 will be going down to 60%. This means you should buy capital equipment this year to get a bigger tax deduction.
5. The Work Opportunity Tax Credit is expiring after 2025. Right now you can apply this tax credit against your income up to $9,600 if you hire someone off of welfare or who is out of the military. And if you’re helping employees with student loans, that credit is also going away in 2025.
6. You can no longer immediately deduct research and development taxes. You have to amortize them over five years.
7. Estate tax exemptions are being cut in half by the end of 2025. So if you’ve built up assets over time, your estate taxes could go up significantly unless you shelter them now in trusts.

**Courtesy of The Hartford**