With the new year just around the corner, it's time to get ahead of the game with the IRS's updated tax and retirement rules for 2025:
Tax Bracket Inflation Adjustment:
The IRS adjusts tax brackets annually to account for inflation using the Consumer Price Index (CPI). For 2025, the tax brackets have been adjusted upwards, which means that the income thresholds for each bracket have increased. This adjustment helps ensure that taxpayers' incomes aren't unduly pushed into higher tax brackets purely because of inflation.
Standard Deduction: - Married Couples Filing Jointly:The standard deduction has increased to $30,000, up by $800 from the previous year.
- Single Filers:The standard deduction has increased to $15,000, up by $400 from the previous year.
Increasing the standard deduction effectively reduces the amount of your income that's subject to federal income tax. For many taxpayers, this can result in lower taxable income and therefore lower tax liabilities.
Marginal Tax Rates:
Marginal tax rates are the percentages at which your income is taxed for each bracket. Here’s how the updated brackets and rates might look for 2025:
|
Gift Tax:
The annual gift tax exclusion for 2025 has increased to $19,000, an increase of $1,000 from the previous year. This exclusion means that you can give up to $19,000 to any number of individuals in a year without incurring a gift tax. 401(k) Contributions: - Employee Deferral Limit -- The amount individuals can contribute to their 401(k) plans in 2025 has increased to $23,500, up from $23,000 for 2024.
- Catch-Up Contributions: For employees aged 50 and older, the catch-up contribution remains at $7,500. However, there's a new provision for those aged 60 to 63, allowing them to contribute an additional $11,250, bringing their total catch-up contribution to $11,250. This means they can defer a total of $34,750 in 2025.
Contextual Details:
Remember, the top tax rate remains at 37%, but the 2017 Tax Cuts and Jobs Act is set to expire at the end of 2025. This could lead to significant changes in tax rates and brackets, so it's important to stay informed and consult with a tax professional about potential impacts on your financial planning. Actionable Advice:
Although these changes won't impact you immediately, it's beneficial to start planning ahead. Consult with your tax professional to understand how these updates might affect your financial strategy. They can provide personalized advice and help you make informed decisions. State-Specific Information:
While these are federal updates, keep an eye out for any changes in your state. For instance, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don't levy a state income tax, which might influence your overall tax planning.
Conclusion:
Stay informed and proactive. For more detailed advice tailored to your situation, please reach out to our office. Staying ahead of these changes can help ensure you're prepared and making the most of your financial opportunities. |
Year-end Gifting:
If you wish to make a charitable, educational or other gift to a 3rd party directly from one of your investment accounts, Friday, December 6th is the deadline for our team to receive your signed instructions to meet the year-end processing timeline. Please consult your advisor. Helpful Year-End Tax Information:
Please see our helpful guide, Preparing for Year-End & the 2024/25 Tax Season, where you'll find important deadlines and valuable information to assist you for the upcoming tax season. Accessing Your Accounts Electronically:
Are you utilizing Account View? The Account View desktop portal and mobile app is available to our clients as a secure, 24-hour online access to your investment account information anytime, anywhere in one easy-to-understand view. Click here for an introductory video.
Account View's Most Recent Enhancements Include:
- Expanded transaction history— You can now view or download up to two years of prior account activity.
- ACH Deposit & Paperless setting in AV mobile app— You can now initiate deposits to non-retirement accounts via the app (up to $75k)as well as opt for eDelivery of statements and other investor mailings.
- Account View has an expanded integration with WealthVision*—You can now accessWealthVisionvia Account View throughsingle-sign-on, streamlining your experience and eliminating the need to remember multiple login credentials. A net-worth widget appears directly on the Account View overview page, so that you can monitor progress toward your financial goals without switching platforms.
To create a secure login for Account View, pleasevisit our websiteand select,"Account Login"from the top right menu item. Proceed by selecting"SIGN UP"in the lower-left corner of the new window that opens and follow the outlined steps. Detailed instructions can be found here.
*If you do not have access to WealthVision, please contact your advisor so that we can connect this service for you
|
Be On the Lookout for Tax Carryovers Deductions or credits not used fully one tax year that may be eligible to be carried over into future years include: - When you have a net operating loss
- When your total expenses for a permitted deduction exceed the amount you’re allowed to deduct in a given year
- When a credit you qualify for exceeds the amount of tax you owe in a year
- Adoption tax credits
- Foreign tax credits
- Credits for energy efficiency
You should have you, your CPA, or your software track these tax carryovers so you don't forget to utilize these tax benefits from one year to the next. |
Tax Tips on Identity Theft Here are a few things that may help you against identity thieves: - The Internal Revenue Service (IRS) never will contact you via email or phone to request personal information. If you receive a scam email or call that claims to be from the IRS, report it to phishing@irs.gov
- People can steal your identity by stealing your wallet or purse, receiving the information they need over the phone or email, finding your personal information in the trash, or accessing information you provide to an unsecured website (only enter credit card information on websites that start with “https://”).
- If you receive a letter from the IRS indicating that more than one tax return was filed in your name, your identity may have been stolen.
|
