Every year, the Internal Revenue Service (IRS) adjusts certain tax items to reflect inflation, living costs, and economic trends. But not everything changes.
For the 2025 tax year, a few key items will remain the same, offering some predictability amid the usual adjustments. Let’s dive into what stays constant and why it matters to taxpayers.
Unchanged IRS Items for 2025
Despite significant updates to tax brackets, deductions, and credits, the following three items will remain unchanged for the 2025 tax year:
1. Itemized Deductions
For yet another year, there will be no limitation on itemized deductions. This is thanks to the Tax Cuts and Jobs Act (TCJA) of 2017, which eliminated the limitation on itemized deductions until 2027.
What does this mean for you? Taxpayers who itemize their deductions can continue to claim the full amount without worrying about a cap.
This is particularly beneficial for high earners or those with significant deductible expenses, like large medical bills, charitable donations, or mortgage interest.
2. Personal Exemptions
Personal exemptions remain set at zero for the 2025 tax year, continuing the pattern established by the TCJA in 2018.
Previously, personal exemptions allowed taxpayers to deduct a set amount for themselves and their dependents, reducing taxable income.
The elimination of this exemption has streamlined tax calculations but has also reduced a tax-saving opportunity for individuals and families.
3. Lifetime Learning Credit (LLC) Threshold
The Lifetime Learning Credit, a valuable tax benefit for those pursuing education, has specific income thresholds that remain unchanged for 2025:
- For joint filers, the credit phases out at a modified adjusted gross income (MAGI) of $160,000.
- For single filers, the phase-out begins at $80,000.
These thresholds have not been adjusted for inflation since 2020. If your income exceeds these limits, you won’t qualify for the LLC, regardless of rising costs or inflation.
Why These Items Stay Unchanged
Certain aspects of tax law are tied to legislation rather than inflation adjustments. The TCJA introduced many changes, some temporary and others permanent, dictating what can and cannot be updated.
The unchanged personal exemptions, for example, are a direct result of this legislation. Similarly, the LLC threshold is fixed by statute and has not been indexed for inflation.
What to Consider
While these unchanged items provide stability, it’s crucial to stay informed about other updates to the 2025 tax rules. Changes to tax brackets, the standard deduction, and various credits might affect your overall tax liability.
For example:
| Tax Item | 2024 Amount | 2025 Update |
|---|---|---|
| Standard Deduction (Single) | $13,850 | Adjusted for inflation |
| Child Tax Credit | $2,000 per child | Adjusted for inflation |
| Earned Income Tax Credit | Based on income | Adjusted for inflation |
Action Steps
- Review IRS Announcements
Stay up to date on IRS changes and understand how they affect your tax return. - Evaluate Filing Strategies
Determine whether itemizing deductions or taking the standard deduction is more beneficial. - Plan for Education Credits
If you’re nearing the LLC income limits, consider strategies to lower MAGI, such as increasing contributions to retirement accounts. - Consult a Tax Professional
Tax laws can be complex. A professional can help ensure you take advantage of every benefit while avoiding penalties.
While the 2025 tax year comes with many adjustments, knowing what stays the same can help you plan better and avoid surprises.
Whether it’s maintaining a steady course with itemized deductions or navigating unchanged thresholds for the LLC, preparation is key to making tax season smoother.
