Big Changes in the New Tax Bill: What it Means for You

We’ve got some exciting (and helpful!) news from Washington. A new tax law was signed into effect on July 4th, and it brings both good news and a few changes you’ll want to know about. In this post, we’ll break it down in plain language—no need to be a tax expert to understand what’s going on.

⬇️ Watch our Wealth Wednesday video for a breakdown, then keep reading for the details. ⬇️

Let’s dive into what’s staying the same, what’s changing, and what you can do to make the most of these new rules.

What’s Staying the Same? 📌

First, let’s talk about what didn’t change.

The tax brackets—the percentage you pay in taxes based on how much money you make—are staying put. These were set back in 2017, and the good news is they’re now permanent. The brackets are 10%, 12%, 22%, 24%, 35%, and 37%. That means no big surprises for your tax rate.

Even better, these brackets will still adjust for inflation. That means as the cost of living goes up, your tax rate won’t go up as fast. And starting in 2026, the 10% and 12% brackets get a little extra boost to keep up with inflation. That’s a win for many families!

What’s Changing? 🆕

Here’s where things get interesting. Let’s go through the biggest updates.

1. Bigger Standard Deduction

This is the amount you can subtract from your income before taxes are calculated. Starting in 2025, it’s going up—and it’s here to stay.

• Single filers: $15,750
• Married filing jointly: $31,500

But wait—there’s more! If you’re age 65 or older, you’ll get an extra deduction. It can be as much as $6,000 per person, depending on your income.

This is especially good news for retirees. Most people over 65 will see a big benefit here—about 88% of them, in fact. And this opens the door for strategies like Roth conversions at a lower tax rate, so you might want to talk to a financial planner.

2. SALT Deduction Expanded 🧂

No, we’re not talking about table salt! SALT stands for State And Local Taxes. Until now, you could only deduct up to $10,000 in state and local taxes on your federal return.

But in 2025, that cap goes way up:

• Most filers: Up to $40,000
• Married filing separately: Up to $20,000

Now, this does have an income limit. If you make more than $500,000 as a couple (or $250,000 as a single filer), the deduction starts to go away. Still, for many people, this is a big help—especially if you live in a high-tax state.

What’s Coming in 2026? 🔮

While most changes take place in 2025, a few new things begin the year after. Here are two that stood out:

1. Charitable Giving Deduction (Even If You Don’t Itemize)

This one’s great for those who give to charity but don’t itemize their taxes. Starting in 2026, you’ll be able to deduct:

• $1,000 for single filers
• $2,000 for married couples

This applies to cash gifts made to qualified charities. It’s a nice little bonus for being generous!

2. Car Loan Interest Deduction

Thinking about buying a new car? Starting in 2025, you can deduct up to $10,000 in interest on car loans—but only if the car is assembled in the United States. This is a new incentive to buy American-made vehicles.

Other Parts of the Law

There are a few smaller changes too. Some involve overtime pay and tipped workers, which may apply if you work in certain jobs. If that’s you, it’s worth talking to a professional to see how it affects you personally.

What Should You Do Now? ✅

Here’s the bottom line: Don’t assume your taxes will look the same next year. These updates can affect your plans—especially if you’re retired or getting close to it.

Here are some steps you can take:

• Review your tax plan: A professional can help you adjust for the new rules.
• Consider Roth conversions: Especially if your taxable income drops thanks to the new deductions.
• Think about your giving: The upcoming charitable deduction could make your generosity go even further.
• Look at car options: If you’re planning a vehicle purchase, check where it’s built, and if the math makes sense.

Final Thoughts 💬

There’s one thing we know for sure about taxes: they always change! But with a little planning, you can stay ahead of the curve and maybe even come out ahead.

If you’re feeling overwhelmed or not sure where to start, don’t worry. You don’t have to go it alone. Reach out to a Certified Financial Planner Pro,  and we’ll help you make sense of it all.

Thanks for reading, and as always, be sure to share this post with friends and family who might find it helpful. 

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