Tax year 2025 Potpourri
January 01, 2026
Dates For Everyone
January 15: Q4 2025 estimated tax payment due.
March 16: Taxes due for partnerships and S-Corps with calendar year filing schedule
April 15: Taxes due for individual returns, C-Corps on a calendar year, estates, trusts, and 990 & 990-T filers; 2026 Q1 estimated taxes also due
May 15: Taxes due for most non-profits
October 15: Extension deadline; let me know well before April 15 if you want an extension so we can estimate your taxes due because the IRS underpayment rate is 7%.
For Individuals
Seniors who turned 60-63 in 2025 may contribute an extra $11,250 toward their 401(k) for a total of $34,750.
While Social Security is still taxable, a new senior (aged 65+) and blind persons deduction of $6,000 per individual may be added to both itemizers’ and non-itemizers’ returns. Phaseouts start at $75,000 for single filers.
Tips “customarily and regularly” received may be deducted from income through 2028 (max. deduction is $25,000), but all tips are still subject to self-employment and payroll taxes. Phaseouts start at $75,000 for single filers.
Overtime pay exceeding the regular rate of pay may be deducted up to $12,500, single filers.
Non-lease car loan interest may be deductible up to $10,000 of interest paid when the auto has final assembly in the USA. Who saw that coming?! Phaseouts start at $100,000, single filers.
The itemized state and local income tax (SALT) deduction increased from $10,000 to $40,000! Finally, some relief and less reason for work-arounds (although PTET work-arounds still reduce taxable income, so, maybe still a yes?).
REMINDER: Reporting virtual currency transactions now requires tracking & reporting per wallet and per account. The IRS cares so much about digital transactions that they added a new line to the 1040. Fancy!
Educator expenses are no longer relegated to the 2% of income limitation and of no use federally! Now, educator expenses are deductible on Schedule A, Itemized Deductions (homeschoolers excluded).
If you experienced a disaster loss, now you must subtract $500 from the loss to claim it on your return, but there is now no adjusted gross income limitation as previously.
The solar deduction credit is now defunct, but perhaps green energy is still worth it.
But, the child tax credit now sits at $2,200. Phaseouts start at $200.000, single filers.
For Small Business Owners
Congress made permanent the 100% bonus depreciation for post 01/19/2025 property with a depreciable life of 20 years or less for immediate expensing, but watch out for recapture when that asset is sold.
Beginning in 2025 there is a reporting requirement for each NOL to report separately using form 172, but you could choose to aggregate similar income sources on the return to simplify matters.
Opportunity Zones (OZ) are back and this time, permanently! Gains on investments in an OZ held 5 years receive a 10% (30% for rural OZs) step-up in basis (90% taxable), but held for 10 years are tax-free via a permanent gains exclusion. Not bad, and there are more OZs now available for investment.
Business mileage deduction for 2025 is 70 cents per mile.
Short term rentals can now deduct losses against other active income when guests stay an average of 7 days or fewer when landlords materially participate. Some of us were not yet born when rents collected were not considered passive income.
Rentals looking to increase depreciation may do so through cost segregation studies that break assets into smaller bits that have faster depreciation rates. Additionally, that depreciation can include the depreciation that was allowed but never taken—all in one year. Costly as they are, would a cost segregation study be of value to you?
The popular research and development credits are back and for years 2021-2024; so, entities can still amend their returns to claim amortized costs as completely deductible expenses, or claim all the credit in 2025, or split the credit between 2025 and 2026.
Planning for 2026
Trump accounts ($1,000 from the IRS to 2026 newborns) won’t start till 2026, but it’s still something to think about when growing the family.
Annual gift tax exclusion of $19,000 for 2025 will remain so for 2026.
Mileage rates for business, health, and charity for 2026 will be 72.5, 20.5, an 14 cents, respectively.
Donations when claiming the standard deduction in 2026 will be deducted separately (not above the line) up to $1,000, single filers; however, also in 2026 donations will be limited to only what exceed 0.5% of AGI. Why? Ask Congress, I guess. Thus, a donor-advised fund or bunching may still be a good option for 2026 so you can cram more donations in one year and fewer in the next. Yet, Qualified Charitable Distributions from IRAs continue to be the best tax-advantaged way to give.
Whew, that was a lot! Tax Potpourri adjourned for now…
Kindly and gratefully,
Christian Christiansen, EA