What Actually Changed on Your Tax Return: The 2025 Tax Law, Translated

The 2025 tax law generated a year of headlines and remarkably little practical explanation. As filing season opens, here is what actually changed on an individual return — and, just as important, which changes carry expiration dates.

The permanent foundation

The individual tax rates and brackets from the 2017 law, which were scheduled to expire, are now permanent — as is the enlarged standard deduction and the 20% QBI deduction for pass-through business income. The planning environment finally has a stable floor. Estate and gift exemptions were also made permanent at a high level, which changes the urgency calculus for families who were racing a sunset.

The big one for our area: SALT

The state and local tax deduction cap rose from $10,000 to $40,000, with small scheduled annual increases — but it phases back down for incomes above roughly $500,000 and reverts to $10,000 after 2029. For New Jersey homeowners this is the single most consequential line in the law; we covered the re-test every household should run in a dedicated article.

The new temporary deductions (all expire after 2028)

A cluster of new deductions arrived, each available even if you take the standard deduction, each with income phase-outs, and each temporary:

•             Tips: a deduction for qualified tip income, up to $25,000, for occupations that customarily receive tips.

•             Overtime: a deduction for the premium portion of overtime pay (the “half” in time-and-a-half), up to $12,500 ($25,000 joint).

•             Seniors 65+: an additional deduction of $6,000 per qualifying person, layered on top of the existing age-based standard deduction addition.

•             Car loan interest: up to $10,000 of interest on loans for new, U.S.-assembled personal vehicles.

Two practical notes. First, these are deductions, not exclusions — payroll taxes still apply to tips and overtime, and the income still appears on your W-2 with new reporting boxes. Second, the phase-outs mean two-earner households near the thresholds should check eligibility before assuming.

Family items

The child tax credit increased modestly (with inflation indexing going forward). New “Trump accounts” — tax-advantaged savings accounts for children, with a government-seeded deposit for newborns in a pilot window — began rolling out; whether and how they fit alongside 529 plans is a fair planning question for young families. Speaking of which, New Jersey families should not overlook the NJBEST 529 state tax deduction, an NJ-specific benefit that predates the federal law but remains widely unclaimed.

Quietly important

•             The 1099-K reporting threshold for payment apps was restored to the old $20,000/200-transaction standard, ending the panic over $600 Venmo forms. (The income was always taxable; only the paperwork changed.)

•             Several clean-energy credits — EVs among them — were terminated early, so purchase-timing assumptions from 2024 no longer hold.

•             For gamblers, the deduction for losses was trimmed to 90% of losses — a niche change with real effects for anyone with substantial reported winnings.

How to think about it

The law’s structure is unusual: a permanent core wrapped in a layer of 2025–2028 temporary provisions, with the SALT expansion on its own 2029 clock. That means the next few filing seasons reward active planning — using windows while they’re open — more than the autopilot years that preceded them.

Romanchuk CPA LLC prepares individual and business returns fully virtually, nationwide, with NJ/NY depth. Now accepting a limited number of new clients for this filing season — see pricing and book at rfg.tax.

This article is general information, not tax advice for your specific situation. Thresholds and figures adjust annually — confirm current amounts before acting.