At the Kiwanis Club’s Sept. 23 meeting, Kiwanian Steve Bates discussed tax changes and the effects of the Big Beautiful Bill.
He began with a true/false quiz to gauge members’ tax knowledge and reminded them that if a notice does not come in the mail it is not from the IRS. He also said there are three reasons for an audit: random selection, something out of kilter on a return, or a complaint. Due to a lack of IRS audit personnel, there have not been many audits in recent years.
The Big Beautiful Bill took existing tax law that was about to expire and made it permanent. However, permanent only means until Congress decides to change it. The standard deduction for 2025 is $15,750 for single filers, $31,500 for married filers and $23,625 for head of household. If you are 65 or older, there is an additional $2,000 deduction. There are no longer personal exemptions because they are built into the standard deduction and the tax rate. The tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Also in 2025, there is an extra $6,000 deduction for seniors 65 and older who receive Social Security. The state and local tax (SALT) deduction has been increased to $40,000. The overtime pay deduction is capped at $12,500 for single filers or $25,000 for married filers. Tips are also capped at $25,000. The 529 custodial account distribution deduction is capped at $20,000 per year. This year, there is an auto loan interest deduction on vehicles assembled in the U.S. The clean energy credits were repealed, including electric vehicles.
On July 4, 2026, the Trump Account will begin. This is for children under 18, and a parent or guardian can put $5,000 per year in an account that will roll over into an IRA at age 18. Also, for any new baby (born in the next three years) who is a U.S. citizen, the government will put $1,000 in an account in their name. The details on the Trump Account are still being worked out, so not a lot is known about how it will function.
He also mentioned child care credits, education IRAs, charitable contributions, adoption credits and the child tax credit. The group asked many questions and made many comments as Bates spoke.
This was a very interesting and informative program that educated attendees on what to expect for their 2025 tax filing.