New legislation, signed into law on July 4, 2025, introduced sweeping changes to federal tax rules, many of which reshape how Americans file their income-tax returns. While most provisions take effect in 2026 and beyond, a few changes—and opportunities—apply for 2025 as well. And you can take advantage of them on the tax return you file by April 15, 2026.

• Tax Breaks Available in 2025 for 2026 Filing (and Beyond)

Increased SALT Deduction Cap
For 2025 taxpayers earning up to $500,000, the state and local tax (SALT) deduction cap rises to $40,000, offering significant relief in high tax states and potentially allowing some taxpayers to itemize their deductions rather than take the standard deduction.

New Deductions for Seniors
In addition to the existing, separate additional standard deduction for those over the age of 65, seniors gain a new $6,000 bonus deduction per person. So, if both married spouses are 65 or older, they will receive an additional $12,000 deduction. This deduction begins to phase out for taxpayers with a modified adjusted gross income (MAGI) over $75,000 (single) or $150,000 (married filing jointly), disappearing entirely at $175,000 (single) or $250,000 (joint). This deduction runs through 2028.

Adoption Credit
Parents who adopt a child now receive a tax credit of up to $5,000 for adoption expenses. A tax credit is a dollar-for-dollar reduction in the amount of tax owed.

Expanded Child Tax Credit
The child tax credit, designed to support families with children under the age of 17, increases to $2,200 per child. It also introduces higher income phaseout thresholds of $400,000 for married filing jointly and $200,000 for all other taxpayers.

• Tax Breaks Available in 2026 for 2027 Filing (and Beyond)

Charitable Contribution Deduction for Nonitemizers
Those who take the standard deduction now have an additional deduction for charitable cash contributions to qualified public charities. The deduction is limited to $1,000 for singles and $2,000 for married couples filing jointly. Donations to donor-advised funds do not qualify for this deduction.

0.5% Floor for Itemized Charitable Contributions
Those who itemize their deductions can deduct their charitable contributions only to the extent that they exceed 0.5% of their “contribution base,” which is essentially their adjusted gross income. For example, a taxpayer with an AGI of $100,000 cannot deduct the first $500 (0.5% of $100,000) of their charitable contributions. However, they can deduct any amount above that, subject to the longstanding limits of 60% of AGI for cash gifts and 30% for appreciated property gifts.

Charitable Deduction Cap for Those in the Highest Income-Tax Bracket
For taxpayers in the top 37% federal income-tax bracket, the maximum tax benefit for itemized charitable deductions is reduced from 37% to 35%. For example, a high-income taxpayer donating $1,000 would receive a $350 deduction benefit (35% of $1,000) instead of the previous $370 (37% of $1,000).

Increased Estate- and Gift-Tax Exemption Amount
The exemption amount for federal estate, gift, and generation-skipping transfer tax is set at $15 million per person. This amount will be indexed for inflation going forward. With proper planning, married couples can essentially combine their exemptions and shelter up to $30 million from these federal transfer taxes. The federal estate-tax rate remains at 40%. So, a single person with an estate of $16 million will pay federal estate tax of $400,000 ($16 million - $15 million exemption x 40%). The new legislation does not change any state-level estate taxes.

We encourage you to explore these changes and opportunities with your tax and legal advisors. If you have any questions about charitable contribution to support our work, our gift planning team would be pleased to assist you with them.