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Tax season is officially here, and 2025 is bringing some important updates you don’t want to miss. With changes to tax brackets, new deductions, and critical deadlines ahead, now is the time to make sure you’re fully prepared. Here’s a quick rundown of what you need to know before filing this year.
2025 Tax Dates to Know
Filing Deadline: Filing can take place from January 27 through April 15, 2025.
Extension Deadline: Make sure you file for an extension by April 15, 2024. If you ask for an extension, you must file by October 15, 2025.
2024 Tax Refund
While there’s no guarantee when your refund will come through, the IRS says that filing electronically and choosing direct deposit as your payment method may speed up the process. If you received Earned Income Tax Credit or Additional Child Tax Credit, the law states that your refund cannot be processed until mid-February. The IRS expects most EITC/ACTC-related refunds to be available in taxpayer accounts by February 27 if they choose direct deposit.
2024 Federal Income Tax Brackets
According to the IRS, the highest tax rate will be 37% for individual single taxpayers whose income is above $609,351. For married couples that file together, this number will go up to $731,201. If you’re married but filing separately, it will be $365,601. Finally, the Head of Household will be taxed 37% at an income of $609,351.
Due to inflation, the cost of everyday items has grown more expensive, increasing the cost of living. The IRS works with the overall cost of living and adjusts tax brackets to reflect what that looks like for individuals and families alike.
2024 Tax Deductions
Standard: Remember that a standard deduction is one where you have not made any itemized deductions and are just working with the part of your income that is non-taxable. For 2024, this will be $15,000 for single filers and $30,000 for married couples filing together. These numbers have increased from 2023 when single taxpayers saw a standard deduction of $13,850 and married joint filers were at $27,700.
Itemized: Itemizing your deductions takes more time and effort but may be beneficial if you end up with more than a standard deduction will give you. If you aren’t sure what’s best for you, we recommend reaching out to a tax professional to help you decide. If you do want to itemize your deductions, here are some things you may be able to add to that list:
- Health insurance
- Mortgage interest
- Medical bills
- Student loan interest
- Educational bills such as tuition
- Donations to charities and non-profits
- State taxes
- Local taxes
- Home improvement (energy saving)
- Electric car credit
- Business expenses
- HSA (Health Savings Account) contributions
It’s important to note this is a condensed list and there are limits from the IRS on any itemized deductions. As we stated above, the best bet is to speak to an accountant or tax professional with any concerns.
What’s New with Taxes in 2025?
The IRS has released a 27-page inflation adjustment report outlining several updates to tax provisions beyond federal tax brackets. Here are some key updates:
HSAs and FSAs
- Flexible Spending Accounts (FSAs): Starting in 2025, taxpayers can contribute up to $3,300 to their health FSA, with a carryover allowance of up to $660 if permitted by their plan.
- Health Savings Accounts (HSAs): Contribution limits for HSAs will increase to $4,300 for individual coverage and $8,550 for family coverage.
Updated Gift and Estate Tax Exclusion
Big news for 2025! The IRS is letting you gift or pass on up to $13.99 million (or $27.98 million for married couples) without paying estate taxes. Plus, you can gift up to $19,000 per person each year without reporting it. But here's the catch—these high limits are set to drop in 2026, unless Congress steps in.
So, if you've been thinking about transferring real estate or making large gifts, 2025 is your year to do it tax-free. For example, you could pass along a $3 million home to your kids without worrying about estate taxes—if your estate is under the limit.
2024 Child Tax Credit Update
To claim the Child Tax Credit (CTC) for 2024 and 2025, your child must meet certain criteria, including age, relationship, and support requirements. They must be under 17 at the end of the tax year, be a U.S. citizen or resident, live with you for more than half the year, and you must claim them as a dependent. Additionally, your income must be under specific thresholds—$200,000 for single filers or $400,000 for married couples.
The Child Tax Credit is important because it can directly reduce your tax bill, putting more money back in your pocket. For many families, this credit can significantly lower their tax liability or even result in a refund. It can help offset expenses like childcare, education, and other child-related costs.
If your credit exceeds your tax liability, you may qualify for the Additional Child Tax Credit (ACTC), which can refund up to $1,700 per child. For dependents who don’t meet these requirements, you may still qualify for the Other Dependent Tax Credit, offering $500 per dependent.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit, a refundable credit for low- and moderate-income workers, will see an increase. In 2025, the maximum credit for qualifying taxpayers with three or more children will rise to $8,046, up from $7,830 in 2024. Workers without children may also qualify, though credit amounts vary by income and family size.
These updates reflect inflation adjustments aimed at providing taxpayers with more flexibility and potential savings in 2025.
IRS Free File: In 2024, the IRS launched Free File, a program for eligible taxpayers to file federal taxes online at no cost. This safe and simple tool uses guided software to make filing easy. You must make less than $84,000 a year to use Free File. Click here to learn more!
IRS Direct File: Opening on January 27, 2025, Direct File allows taxpayers in 25 participating states to file their federal and state taxes directly online. If you lived and worked in one of these states throughout 2024, you’re eligible to use this convenient tool. New for 2025, Direct File lets you import W-2 wage information, saving you time during the filing process. The program is available until October 15, 2025. Click here to learn more!
Participating States: Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin, and Wyoming.
No matter, if you’re single, married, doing a standard deduction, or itemizing, making sure your taxes are correct, is crucial. When in doubt, hire a professional; it just may help you get more out of your tax return this year!
Please remember this article is just a guideline and Churchill Mortgage does not give any tax advice. Now, if you’re hoping to buy or refinance in 2025 and are looking for home loan advice, we're here to help! Click here to connect with a Home Loan Specialist.
The information contained herein is general in nature and based on authorities that are subject to change. Churchill Mortgage guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Churchill Mortgage assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations.
