Why 2025 Taxes Could Cost You More Than You Think

WASHINGTON, D.C., 15 April 2025 – While millions of Americans do a collective sigh of relief after submitting their 2024 income tax returns, a more complex image is already taking shape by 2025. Behind the scenes, the proposals for federal tax reform, the ​change in IRS thresholds and a series of state compliance rules silently lay the foundations for a costly and confusing fiscal period in 2026.

How do states make up the federal tax law?

At the heart of the question is ​a fundamental challenge: State compliance ​with the Internal Income Code (IARC). States are ​generally divided into two ​cubes: in compliance or in accordance with a fixed date. About half of the U.S. states use an ongoing ​compliance approach, ​which means that they automatically adopt amendments to federal ​tax legislation, unless they explicitly disconnect from specific provisions.

The other half works with fixed date compliance. These states adopt a ​version of the IRC from a given date, usually updated annually during their legislative sessions. The moment ​becomes a major problem here, especially when the ​major federal tax reform strikes after the states have already ​blocked their compliance for ​the year. If tax reform comes too late, these states may deviate significantly from federal rules.

This disconnection could result in taxpayers facing completely different rules ​at the state and federal levels with respect to income, allowances and depreciation. As ​RSM US LLP said, the consequences could extend ​beyond 2025 if states do not act quickly or cannot ​convene special sessions to adjust their tax codes.

What federal tax changes are on the table for 2025?

The list is long and ​shocking. Legislators are weighing changes to some of the most consequential provisions of the Tax and Employment Reductions (TCJA) Act, many of which ​were sunset at the end of 2025. According to RSM and the United States today, the following areas are ​being studied:

• SALT ​Deduction Limits: The current $10,000 cap may shift, but proposed ​changes could instead hit corporate taxpayers by eliminating or limiting their state ​and local tax deductions.
• Section ​174 ​– R&E Costs: The current law requires capitalization ​and amortization of research ​expenses, but reform might restore immediate expensing—something many states already decouple from.
• Section ​163(j) – Business ​Interest Expense: ​The existing EBIT-based limitation may revert to an EBITDA calculation, increasing deductibility for many companies.
• Bonus Depreciation (Section ​168(k)): ​A phasedown to 40% depreciation ​for ​qualifying property is currently in motion. New legislation could extend 100% depreciation, creating basis mismatches across states.
• Corporate Tax Rate ​Reductions: Proposals to lower corporate tax rates, especially ​for domestic manufacturers, could shift tax planning incentives dramatically.

What will be the impact of state taxes on ​these changes?

Although federal changes were completed by the end of 2025, most state legislatures would then be out of session. In the case of fixed-date compliance states, this could create significant differences between federal and ​state tax treatment. For example, a company may benefit from the operation of ​R Dueamp; E at ​the federal level, but it must always capitalize on these expenditures at the state level, which increases the tax complexity deferred.

Even undulating compliance states ​may result in complications through selective ​decoupling, particularly in provisions such as amortization ​of bonds or interest deductions. According to ​RSM, companies with multi-state activities should be supported for a variety of results, with some jurisdictions requiring significant tax ​adjustments by 2025.

What can you learn from this year’s return?

“Most ​taxpayers can adjust their retention rates as often as they want,” says Mark Steber, Jackson Hewitt’s tax director. Such flexibility is ​crucial in a year when so many moving parts could affect ​tax performance. If you have been ​surprised by an exceptionally ​large balance or repayment, it is time to review your W-4 and estimate how future changes can affect your situation.

Lisa Greene- Lewis, spokesperson for CPA and TurboTax, notes the value of proactive planning: “If you haven’t had the tax result you’ve been waiting for or had a life change like having a ​new ​job, having a baby, or buying a home, ​it’s time to review and possibly adjust your retention. »

Will IRS ​inflation adjustments be useful?

The IRS already announced adjustments to tax support in 2025. ​While tax ​rates remain unchanged, income ​thresholds have increased to reflect ​inflation. For ​example, 10% support for individual files now applies to revenues up to $11,925 and 37% of the main support for joint archives starts at ​$751,600 – ​about $20,000 more ​than last year.

The standard deduction also ​increased: $15,000 for individual files and $30,000 for ​married couples who ​jointly file. But the provisions of tax cuts and jobs The law extending these deductions expires after 2025 unless extended by Congress. Such a ​reduction could significantly increase taxes for many households ​by 2026.

How can you wisely use your refund?

If you are among the millions who received a tax refund – average of $3.116 this year according to IRS data – it is worth making a plan. The experts recommend that part ​of this fund be used to create an ​emergency fund, particularly given the continuing ​economic uncertainty. Consider reducing living expenses by three to six months in a successful savings account or money market fund.

Another option is to invest in a retirement account. ​Americans aged 60 to 63 can now contribute up to $34,750 in 2025 for 401 ​k plans. “With stock ​prices still relatively low, contributing early could offer better growth potential,” ​says CPA Richard Pon.

Can the benefits of ​the workplace reduce your tax law?

Sure. Employer contributions to ​retirement accounts such as 401 ​k) reduce taxable income and may differ from tax. ​Health savings accounts and flexible expense accounts also offer tax benefits for skilled and dependent health care costs. ​Morgan ​Stanley notes that many employers ​now offer donor funds to receive charitable donations, ​which may qualify for deductions.

Confused about stock options or RSU? You’re not alone. Fair pay can be difficult, especially for early drivers. Experts ​recommend working with ​their ​HR department or ​tax advisor to understand their obligations and opportunities.

Should you sell or buy ​a house this year?

The spring housing season is ​here, but before buying or selling, consider the tax implications. If you sell a house that you owned and used as a principal residence for two of the last five ​years, you may be eligible for the ​profit ​exclusion up to $500,000. Remember to document improvements to ​reduce your tax gain.

On the buyer’s side, consider the differences between the limits ​on the ​deduction of mortgage interest ​by state. The federal cap is $750,000, but California authorizes up to $1.1 ​million, including equity. On the other hand, ​North Carolina limits the combined ​deduction for interest and property taxes to ​only $20,000.

How to prepare for 2025?

The experts agree on one thing: start now. Do not wait until next year to arrange receipts, track deductible costs or adjust your retention. “To organize taxes for 2025, start in 2025 and not ​in ​2025,” explains CPA Richard Pon. ​This means creating records, keeping spreadsheets and keeping charitable donation receipts, business ​expenses, child care expenses and education expenses.

Understanding basic tax vocabulary can also go ​far. ​As Carrie Joy Grimes, CEO of WorkMoney says: “Once you know the lingo, ​you ​will be more aware of taxes all year round and you will have a start when you ​present your next return.”

The 2025 fiscal season may feel far away, ​but between the imminent federal reform, the evolution of ​state compliance and the new ​IRS thresholds, it is now time to prepare. Whether you are a business owner navigating for multi-state compliance or an employee taking into account your next retirement move, keeping informed will be the key to avoiding surprises, and ​saving money.