IRS Highlights Five Important Tax Changes for 2025
Posted in Offshore Account Update on February 28, 2025 | Share
The Internal Revenue Service (IRS) recently issued a News Release highlighting seven important changes to the federal tax code for 2025. These changes apply to tax returns for the 2024 tax year filed with the IRS in 2025. Here is an overview of what taxpayers need to know from Washington D.C. IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.
5 Important Tax Changes for Tax Returns Filed in 2025
1. Standard Deduction Increases
The standard deduction has increased for all U.S. taxpayers in 2025. For the 2024 tax year, the standard deductions are as follows:
- Single or Married Filing Separately - $14,600
- Head of Household - $21,900
- Married Filing Jointly or Qualifying Surviving Spouse - $29,200
While taxpayers can often reduce their tax liability by itemizing their deductions rather than taking the standard deduction, doing so requires clear and comprehensive documentation. Improperly claiming itemized deductions is a frequent trigger of IRS audits, and these audits can expose taxpayers to substantial liability for interest and penalties.
2. Child Tax Credit Enhancement and Additional Child Tax Credit Update
The child tax credit starts at $2,000 for each qualifying child for the 2024 tax year, with the phase-out beginning at an adjusted gross income of $200,000 (or $400,000 for married parents filing jointly). The maximum additional child tax credit has been increased to $1,700 per qualifying child for the 2024 tax year.
3. Earned Income Tax Credit Qualification Changes
For the 2024 tax year, the earned income tax credit (EITC) is only available to U.S. taxpayers without a qualifying child who were between the ages of 25 and 65 at the end of 2024. For married couples filing jointly, only one spouse needs to meet the revised age qualifications for the EITC.
4. IRA Contribution Limit Increases
Making contributions to an individual retirement account (IRA) allows U.S. taxpayers to reduce their taxable income (though all income still needs to be reported). For the 2024 tax year, the IRA contribution limit is increasing to $7,000 for individuals who are under the age of 50 and increasing to $8,000 for individuals who are age 50 or older.
5. Revised 1099-K Reporting Requirements
Payment apps, cryptocurrency exchanges, and other third-party settlement organizations (TPSOs) must file Form 1099-K with the IRS for all taxpayers who conducted transactions involving total payments of more than $5,000 in 2024. The IRS uses TPSOs’ 1099-K filings to assess the accuracy of U.S. taxpayers’ returns and determine when audits are warranted. If the figures on a taxpayer’s returns do not align with the figures on a TPSO’s 1099-K, this presents a high risk of triggering scrutiny from the IRS.
Contact Washington D.C. IRS Tax Lawyer Kevin E. Thorn for More Information
Washington D.C. IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, represents individual and corporate taxpayers in all IRS-related matters. If you have questions or concerns about federal tax compliance in 2025—or if you have recently discovered an issue on a prior year’s return—you can call 202-349-4033 or contact us online to request a confidential consultation.
