Federal Tax Provisions for Individuals As of July 2025
Recent federal legislation includes a mix of tax cuts, credit expansions, and planning incentives—many of which are extensions or modifications of the 2017 Tax Cuts and Jobs Act. Others are newly proposed, with temporary windows for action. This guide summarizes the changes most relevant to individual taxpayers and families. Several of these provisions take effect or expire in 2025, making this a key year for proactive planning. The focus here is on planning opportunities—areas where early action or strategic coordination could enhance your after-tax financial outcomes.
Note: This summary does not cover every provision or nuance. Please consult with your Castlepoint advisor and your CPA before making any decisions.
Key Tax Planning Opportunities
| Provision | Details | Effective Date | Planning Insight |
| Lower Tax Brackets Extended | The lower tax brackets introduced under the 2017 TCJA—ranging from 10% to 37%—are now permanently extended. While the structure remains unchanged, the legislation provides for an additional year of inflation adjustment for the lower brackets, resulting in slightly wider thresholds for the 10% and 12% brackets. | 2026 | This is a significant opportunity for income timing. For example, those in retirement or in low-income years may want to accelerate Roth conversions, while high earners may want to manage capital gains or defer income to remain in lower brackets. |
| Provision | Details | Effective Date | Planning Insight |
| ‘Trump Accounts’ – Tax-Free Savings for Minors | Establishes a new type of tax-advantaged savings account for minors with a $5,000 annual contribution limit. Before age 18, investments must be in low-cost index funds. Distributions prior to age 18 are generally not allowed. | 2026 | These accounts are useful for long-term educational or life- start planning. Families may consider shifting annual gifts or custodial account contributions to this more tax- advantaged vehicle. |
| Above-the-Line Charitable Deduction | A new deduction is introduced for taxpayers who take the standard deduction but still wish to receive some tax benefit from charitable giving. The deduction allows for up to $2,000 for married filers and $1,000 for all others. | 2026 | This is an incentive for non- itemizers to continue making charitable donations. Consider setting up automatic monthly contributions to maximize the deduction annually. |
| Child Tax Credit Expanded and Indexed | The Child Tax Credit will continue at a base amount of $2,000, and starting in 2025, it increases to $2,200 per qualifying child. This amount will be indexed for inflation beginning in 2026. The income phaseouts remain unchanged at $400,000 (MFJ) and $200,000 (others) and are not indexed. The $500 nonrefundable credit for dependents other than qualifying children is also made permanent. | 2025 | Households with dependent children should review income timing, potential refund eligibility, and the opportunity to coordinate with dependent care FSAs or other child-related benefits. |
| EV Tax Credit Expiring Early | Accelerates the expiration of both new and used clean vehicle tax credits. Originally set to run through 2032, the credits will now sunset at the end of Q3 2025. | Ends Sept 30, 2025 | Anyone considering an electric vehicle purchase should act by fall 2025 to lock in the credit, which can be worth up to $7,500 depending on the vehicle’s battery and assembly qualifications. |
| Expanded QSBS Exclusion | The Qualified Small Business Stock (QSBS) exclusion is modified to allow tiered exclusions: 50% after a 3-year holding period, 75% after 4 years, and 100% after 5 years. Additionally, the per- issuer gain cap is increased from $10 million to $15 million for stock acquired after enactment, and the corporate asset test threshold is increased to $75 million. Both thresholds will be indexed for inflation beginning in 2027. | Stock acquired after enactment | This enhances the appeal of startup equity and private company stock as part of long-term tax planning. Clients investing in or founding early-stage businesses should maintain accurate acquisition records and evaluate their exit timelines to maximize exclusions. |
| Provision | Details | Effective Date | Planning Insight |
| Qualified Opportunity Zone (QOZ) Enhancements | Makes QOZ designations permanent with rolling 10-year windows starting in 2027. Gain deferral continues but is now limited to 5 years after investment or date of sale, whichever comes first. Investments held at least 10 years receive a full step-up in basis to fair market value. New reporting requirements and limitations on eligible tracts. | Investments after 12/31/2026 | Clients with large capital gains may benefit from deferral by investing in eligible QOZs. The new rules reinforce long-term holding and increase planning complexity, so due diligence and structuring are key. |
| Increased Standard Deduction | The standard deduction amounts rise to $31,500 for married couples filing jointly and $15,750 for individuals, beginning in 2025. These amounts will adjust annually for inflation starting in 2026, but with a new baseline year (2024), which results in smaller increases compared to prior rules. | 2025 | This shift may make itemizing less common. Clients who are close to the standard deduction threshold can benefit from ‘bunching’ strategies—timing multiple years of charitable gifts, property taxes, or medical expenses into a single tax year. |
| Car Loan Interest Deduction | Permits an above-the-line deduction of up to $10,000 annually for interest paid on personal auto loans, but only for new vehicles assembled in the United States. Income phaseouts apply: $100,000 for individuals and $200,000 for joint filers. | 2025–2028 | Buyers should verify vehicle eligibility (final assembly location and VIN reporting required). For clients planning to finance a car purchase, this deduction could create meaningful short-term savings. |
| Deduction for Tips and Overtime Pay | Allows an above-the-line deduction for up to $25,000 in tips or overtime income. Applies to cash tips in traditionally tipped occupations and overtime for hourly workers. Independent contractors are also eligible. Phases out at $150,000 (individual) and $300,000 (joint). | 2025–2028 | Ideal for clients in hospitality, healthcare, or skilled trades. If income qualifies, this can reduce AGI and open up eligibility for other deductions or credits. |
| 529 Expansion | Expands the definition of qualified education expenses to include a wider range of elementary and secondary school costs—such as tutoring, online courses, educational therapies, and test fees. The annual cap for such distributions increases from $10,000 to $20,000. | Expense expansion: upon enactment; $20,000 cap: 2026 | Families with private or special education needs can now tap into 529 plans more flexibly. Those already contributing may wish to increase contributions or front-load future years. |
| Child & Dependent Care Credit + FSA Enhancement | The maximum exclusion for employer- provided dependent care assistance increases to $7,500 (from $5,000), and the child & dependent care credit becomes more generous, with expanded phaseouts and higher percentage rates for moderate- income families. | 2026 | This will benefit dual-income households and single parents. A coordinated review of employer benefits and tax credits can optimize total savings. |
| 529-to-ABLE Rollovers Made Permanent | Makes permanent the provision allowing unused 529 plan assets to be rolled over into ABLE accounts (savings accounts for individuals with disabilities), subject to annual contribution limits and coordination rules. | 2026 | A major benefit for families with special needs planning considerations. Preserves |
