With the changes happening in Washington, D.C., there is now some uncertainty about what tax policies we may see in 2025 and beyond. During this time of uncertainty, creating a workable tax plan is challenging. However, we know several things about tax law changes starting in 2025. Here are the key highlights as we currently know them.

What we do know

• Tax brackets and rates. The seven tax rates remain unchanged, while the income subject to each rate got a slight bump. After a 5.4% increase in 2024, an additional 2.8% increase in income is subject to each tax rate in 2025. This means more of your income will be subject to a lower tax rate.
• Higher retirement plan limits. The amount you can contribute to a 401(k) in 2025 is $23,500, up from $23,000 in 2024. The 401(k) catch-up contribution limit in 2025 stays at $7,500 if you are between 50 and 59 and 64+. New in 2025, if you are ages 60 to 63, the catch-up contribution limit increases to $11,250. The annual contribution threshold for IRAs remains at $7,000, as does the IRA catch-up contribution limit of $1,000.
• New cryptocurrency reporting rules. New reporting rules in effect as of January 1, 2025, mean you’ll need to be more vigilant with tracking your cryptocurrency transactions and complying with the IRS’s digital asset rules. Brokers of digital assets, including cryptocurrency exchanges, custodial services, and specific payment processors, must report sales and exchanges of digital assets to the IRS starting in 2025. Your digital asset transactions will be summarized annually on a new Form 1099-DA. This new reporting of digital asset transactions will be similar to existing reporting for traditional securities such as stocks and bonds.

2025 tax law changes

• The 1099-K reporting threshold. If you use third-party payment processors like Venmo or sell tickets on apps like SeatGeek, you’re more likely to receive a tax form for your activity that will also be sent to the IRS. The required limit to report your activity was $5,000 in 2024. In 2025, this threshold will be lowered to $2,500 and reduced in 2026 to $600.
• Uncertainty over TCJA provisions. There has been discussion about extending and/or making many provisions in the Tax Cuts and Jobs Act (TCJA) of 2017 permanent. Most provisions are scheduled to expire at the end of 2025, so we will pay attention to any forthcoming legislation that could change this tax landscape.
• Proposed decrease in corporate tax rates. There is also discussion about lowering the corporate tax rate from its current level of 21% and the effective corporate tax rate from 21% to 15% for domestic manufacturers.

Stay tuned for continuing updates on any tax changes as events unfold in 2025. If you have any questions, please contact our RRBB advisors.