Tax Law Changes and Your Guide to Filing Taxes in 2025

This upcoming tax season, there are some changes to tax laws or adjustments to key amounts that may impact your federal tax return. We are here to break down the key tax law changes and what you need to know to help you understand the impacts to your taxes and guide you as you get ready for this upcoming tax season. 

You also don’t need to remember all of this when you file your tax returns. If you have questions, you can meet with a TurboTax Live Full Service tax expert who can prepare your taxes in a day and in some cases within an hour.

First, let’s get some basics out of the way like when you can file your return, when is the filing deadline for your 2024 tax return, and what is the standard deduction for tax year 2024. Once we have those out of the way, we can dig into some tax law changes, adjustments, and key things you need to know to help you easily file your taxes.

When can I file my 2024 tax return? (the taxes you file in 2025)

The IRS typically opens for the season in January, but TurboTax will be accepting returns and ready to help you prepare your tax return in early January! Check back with the TurboTax blog for updates on the IRS e-file open announcement.

When is the deadline for filing my 2024 tax return? 

The deadline for filing your 2024 is midnight on Tuesday, April 15, 2025. People who live in areas that are affected by natural disasters may also have later deadlines. 

When was the deadline for filing my 2023 tax return? 

The deadline for filing your 2023 tax return was midnight on Monday, April 15, 2024, unless you filed for an extension. People who live in areas that were affected by natural disasters may also have later deadlines.

What is the standard deduction for 2024 tax returns? 

The standard deduction is adjusted for inflation every year and for single taxpayers (and married individuals filing separately) the standard deduction increased $750 from the previous year and is $14,600 ($29,200 for those married filing jointly). While for heads of households, the standard deduction will be $21,900, up $1,100.

What is the standard deduction for 2023 tax returns? 

The standard deduction for 2023 increased $900 from the previous year and rose to $13,850 ($27,700 for those married filing jointly). While for heads of households, the standard deduction will be $20,800, up $1,400. 

What are the key tax law changes and the tax implications?

Key tax benefits related to COVID relief, like the Child Tax Credit first reverted to Pre-American Rescue Plan tax rules or went away in tax year 2022 (the taxes filed in 2023), causing tax filers to see lower refunds than they were accustomed to when COVID relief was in place. Although not a new tax law change for tax year 2024, we want to make sure we include those tax benefits here as a reminder since you may be claiming some of those key tax benefits for the first time again since COVID relief was in place. The key tax benefits that contain provisions that reverted to Pre-American Rescue Plan tax rules and could cause a lower tax refund include the Child Tax Credit, the Child and Dependent Care Credit, and the Earned Income Tax Credit, as follows:

Child Tax Credit 

There has been a lot of discussion regarding changes to the Child Tax Credit, but to date the Child Tax Credit remains at up to $2,000.

For tax year 2024, the Child Tax Credit  benefits are as follows:

• Credit changed from up to $3,600 under COVID relief in tax year 2021 to up to $2,000 
• Each dependent child must be under age 17
• No longer fully refundable but is refundable up to $1,700 
• There were no advance payments issued after tax year 2021 
• The credit is available if you earn up to $200,000 as single taxpayer or head of household (or up to $400,000 if you are a married couple filing jointly)

Child and Dependent Care Credit

Like tax year 2022 and tax year 2023, the Child and Dependent Care Credit provisions remain at what they were prior to COVID relief provided under the American Rescue Plan: 

• Up to 35% of $3,000 ($1,050) of child care expenses for your dependent child under 13, an incapacitated spouse or parent, or another dependent so that you can work or look for work. 
• If you have two or more dependents, the credit will be up to 35% of $6,000 in expenses ($2,100). 
• If you were able to take this credit in tax year 2021, the credit was increased considerably under COVID relief and was up to $4,000 (50% of $8,000) for one child and $8,000(50% of $16,000) for two or more kids.
• The credit will be reduced at incomes over $15,000.

Earned Income Tax Credit

Earned Income Tax Credit (EITC) is a tax break for low- to moderate-income workers and families. This credit can reduce the taxes you owe and maybe even result in a bigger refund. For tax year 2024, this tax credit is worth up to $7,830 ($7,430 for tax year 2023) for a family with three kids. Tax filers with no kids must be at least age 25 but under age 65 to claim the credit.

American Rescue Plan Provisions

Form 1099-K – Payment Card and Third-Party Network Transactions 

If you’re self-employed and accept credit, debit, or prepaid cards, or have payments processed by third parties like Venmo and PayPal, you may receive Form 1099-K for payments processed by a third party. This includes creators, influencers, rideshare drivers, or side-giggers. If you’re an online seller selling on platforms like Ebay, AirBnB, Etsy, and VRBO you may also receive Form 1099-K.

The American Rescue Plan of 2021 changed third party payment processors reporting requirements to payments processed exceeding $600, which is down considerably from the original more than 200 transactions per year and exceeding an aggregate amount of $20,000 reporting requirement.The change was to take effect with transactions starting tax year 2022 but on December 23, 2022 the IRS announced an initial delay and on November 21, 2023 the IRS announced another delay in reporting thresholds for third-party settlement organizations (TPSOs). As a result of this delay, Third Party Settlement Organizations (TPSOs) were not required to report tax year 2023 transactions on a Form 1099-K to the IRS or the payee for the lower, over $600 threshold amount enacted as part of the American Rescue Plan of 2021. This means that for tax year 2023 (the taxes you file in 2024) the existing 1099-K reporting threshold of the aggregate of more than $20,000 in payments from over 200 transactions remained in effect. The IRS is currently planning for a threshold of $5,000 for tax year 2024 (the taxes you file in 2025) as part of the phase in to implement the lower over $600 threshold enacted under the American Rescue Plan.

Although the Form 1099-K reporting threshold for tax year 2023 was $20,000, companies could still send the form for totals of the lower over $600. This is not a tax law change, but a change in the reporting requirement for third party payment processors. If you are self-employed you were always supposed to report self-employment income and if you had a net income of $400 you are required to file your self-employment taxes regardless if you received a form. Don’t forget, if you are self-employed, you can also deduct all of your expenses directly related to your business.

Inflation Reduction Act

The Inflation Reduction Act was signed into law in August 2022, with new tax provisions, extensions and expansions of tax benefits related to energy efficiency, healthcare, and corporate tax. Most of the provisions under the Inflation Reduction Act go into effect for tax year 2023.

The Inflation Reduction Act was signed into law in August 2022, with new tax provisions, extensions and expansions of tax benefits related to energy efficiency, healthcare, and corporate tax.  Most of the provisions under the Inflation Reduction Act went into effect beginning with tax year 2023.

The solar energy credit increased to 30% if you purchase residential energy efficient property like solar panels and solar water heaters between January 1, 2022 through December 31, 2032.

The energy efficient home improvement credit amount was increased from up to 10% of the cost to up to 30% of the cost of certain qualified energy efficient improvements for tax year 2023 with the maximum you can claim being up to $1,200 for certain energy efficient improvements and up to $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers.

The credit no longer has a  lifetime dollar limit like the previous $500 lifetime dollar limit.If you purchased an electric vehicle most of the changes under the Inflation Reduction Act are effective with electric vehicles purchased starting January 1, 2023. This dollar-for-dollar credit can reduce taxes you may owe by up to $7,500. As of August 17, 2022, new electric vehicles must receive final assembly in North America.

For the first time, beginning in tax year 2023, if you purchased a used electric vehicle you may be eligible for a tax credit up to the lesser of $4,000 or 30% of the sales price.

Whether you can take the credit for your electric vehicle purchase depends on your income, the price of the electric vehicle, and whether there was final assembly in North America.

Beginning in tax year 2024, you are allowed to transfer the allowable credit to an eligible dealer to reduce the amount owed on the purchase of a new or used electric vehicle. You have to meet all of the qualifications to be eligible for the credit, which will be reconciled when you file your taxes. If you don’t meet the new income requirements to be eligible for the electric vehicle credit you will need to pay back the transferred credit which reduced your purchase price.

Student Loan Payments

On June 14, 2023, the U.S. Department of Education announced that Congress passed a law that would prevent further extension of the student loan payment pause. As a result, student loan interest resumed starting on September 1, 2023 and payments were due starting October 2023.  You can deduct student loan interest up to $2,500 on your taxes.

What are some of the other adjustments to key amounts that impact my taxes?

Retirement Plan Contributions

The maximum contribution limits for 401K plans increased to $23,000 for 2024 ($30,500 if you are 50 and over). The maximum contribution limit for traditional and Roth IRAs increased to $7,000 ($8,000 if you are 50 and over). You can make a 2024 contribution to your IRA until the April deadline and you may be able to take a deduction for the contribution amount on your 2024 taxes (the ones you file in 2025).

Health Savings Account

You can make contributions to your Health Savings Account up to $4,150 for self-only coverage and up to $8,300 for family coverage for 2024. Keep in mind, you may be able to deduct contributions you made directly to your health savings account at tax time.

Flexible Spending Account

You can make a contribution up to $3,200 and if you have an employer plan that allows carryover of unused amounts the maximum carry over amount for 2024 is $640.

Deductible Mileage Rates

If you drive for your business don’t forget to keep track of your business mileage since you can deduct your business mileage which for tax year 2024 the mileage rate for business is 67 cents per mile (65.5 for tax year 2023). If you had to travel to doctors visits, you may be able to deduct your expenses related to traveling to doctors visits at 21 cents per mile (22 cents for tax year 2023). If you drove to volunteer for a 501(c)(3) recognized charity you may be able to deduct your mileage expenses at 14 cents per mile.

The Adoption Credit

If you paid qualified adoption expenses in 2024, you may be able to take a credit up to $16,810 on your 2024 taxes ($15,950 for tax year 2023).

Annual Gift Tax

The annual gift tax exclusion for 2024 is $18,000 ($36,000 if you are married).  So you can gift up to $18,000 without having to pay taxes on that amount.

What else should I look out for when filing my taxes?

Unemployment Benefits 

If you received help from unemployment insurance, you will need to pay taxes on payments received from unemployment benefits. You should receive a 1099-G reporting unemployment benefits received. 

Business and at-Home Deductions 

If you’re self-employed, there are plenty of deductions that you can claim, from your business travel mileage to the portion of your home dedicated to your home office. TurboTax Premium will guide you and search industry-specific deductions to make sure you don’t miss business deductions related to your self-employed income.

If you are one of the many Americans with an employer who has been working from home, you won’t be able to claim a deduction for your home expenses. Unfortunately, this deduction is for self-employed workers only.

What tax forms and documents should I gather?

If 2024 was the first year that you worked a side gig, received unemployment benefits, or traded stock you may get more tax forms than you have before. 

Here are some common tax forms where your income will be reported and you can expect to receive if any of these scenarios apply to you: 

• 1099-G: If you received unemployment benefits. 
• 1099-DIV/1099-INT: If you were paid dividends or earned interest over $10. 
• 1099-NEC: This is a form where self-employment income or nonemployee compensation is reported.
• 1099-MISC: If you earned rental or other income, but self-employment income is no longer reported on this form.
• 1099-K: If you earned income from credit card payments, debit cards, prepaid cards or a third party processor like Venmo, PayPal, CashApp you may receive this form if the aggregate is more than $20,000 in payments from over 200 transactions.
• 1099-SA: If you got health savings account distributions. 
• 1099-R: If you received distributions from a retirement plan or IRA. 
• 1099-B: If you sold stock 
• W-2: If you earned wages from an employer. 

Don’t worry about knowing these tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers. You can also meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right.