Every year brings changes, but 2025’s batch is already catching practitioners off guard, and in some cases, catching clients off guard too.
Between inflation adjustments, SECURE 2.0 provisions landing for the first time, and a slate of new deductions from the One Big Beautiful Bill Act (OBBBA) that clients have been reading about all year, there’s a lot to sort through before you file a single return. Here’s what matters most
The IRS adjusted for inflation across the board for 2025, which means higher standard deductions, slightly wider tax brackets, and updated contribution limits. This is good news, in theory. In practice? These adjustments generate a wave of “why does this number look different?” questions from clients comparing line items to prior-year returns.
Key figures for 2025:
This one has been all over the news, and your clients have almost certainly heard about it. Here’s the honest version: it’s a deduction, not a full exemption, but it’s still meaningful for the right clients.
Under the OBBBA, signed into law July 4, 2025, employees and self-employed workers in qualifying tipped occupations (think wait staff, bartenders, salon workers, and gig workers who regularly receive tips) can deduct qualified tip income from federal taxable income for tax years 2025 through 2028. The IRS has already released a new schedule to claim it.
The catch: the max deduction is $25K, but phases out for taxpayers with modified adjusted gross income above $150,000 ($300,000 for joint filers). And state income taxes are a separate conversation; most states haven’t conformed.
For clients who qualify, this is a real benefit worth capturing. For clients who heard “no tax on tips” and assumed their entire tip income is now off the table regardless of their income level, it’s worth a gentle recalibration.
Another provision clients are asking about is the so-called “No Tax on Social Security.”
Here’s what was actually enacted: OBBBA created a new $6,000 per-person deduction for taxpayers age 65 or older (so $12,000 for a married couple where both spouses qualify). It applies to tax years 2025 through 2028.
The practical effect is significant: The White House Council of Economic Advisers estimates that roughly 88% of Social Security recipients will owe no federal tax on their benefits under the new structure. But Social Security income isn’t technically tax-free — it’s that the additional deduction effectively wipes out the tax liability for most seniors.
For higher-income retirees, some Social Security taxation may still apply. And there’s a separate bill — the You Earned It, You Keep It Act — that would fully eliminate Social Security taxation, but that legislation is still pending as of this filing season.
The takeaway: Don’t over-promise to clients. Confirm eligibility, verify the deduction is captured correctly on the return, and note that the full exemption some clients may have read about isn’t in effect yet.
If you have clients with children born between January 1, 2025 and December 31, 2028, there’s a meaningful action item on their 2025 return: filing IRS Form 4547 to claim the $1,000 government seed contribution to a new Trump Account.
Trump Accounts are a new tax-advantaged savings vehicle for minors, created under the OBBBA. Think of them as a custodial IRA for children. It’s important to note, the birth-year window (2025–2028) applies only to the $1,000 seed contribution, not to account eligibility generally (any child under 18 with a valid SSN can have one).
Annual contributions are capped at $5,000 (indexed to inflation), there’s no earned income requirement, and the government seeds eligible accounts with $1,000 for qualifying births. The accounts officially launch July 4, 2026, with the IRS sending account activation details in May.
A few things practitioners should know:
The accounts aren’t available yet, but the Form 4547 election on the 2025 return is the step that locks in the government seed. For clients with a new baby, this is a quick win that costs nothing.
Amid the headlines about new provisions, one thing that hasn’t changed: the underlying TCJA framework was made permanent by the OBBBA for most individual provisions. The higher standard deduction, reduced rates, and increased estate tax exemption are no longer sunsetting after 2025 — but practitioners working with high-net-worth clients should confirm which provisions apply and through when, as the specifics vary.
SECURE 2.0 has been phased in over several years, and 2025 is the year a few important pieces fully land. The enhanced catch-up contribution limit for ages 60–63 — now $11,250 versus the standard $7,500 — is in effect for the first time for the 2025 tax year, meaning it will appear on returns filed during the 2026 filing season. Expect client questions, and expect some 1099-R reporting to be inconsistent as plan administrators catch up.
Also now mandatory: automatic enrollment requirements for 401(k) plans established after December 29, 2022. If you work with business owner clients who set up new plans in the last couple of years, it’s worth a quick check to confirm compliance.
With TaxNow, you can pull updated Wage & Income transcripts and verify what’s already posted to IRS systems before you prepare a single return. As new forms come through and new items create potential for mismatches, transcript monitoring helps you catch discrepancies early and flag potential CP2000 issues before they escalate.
In a year this dense with changes, real-time visibility into the IRS’s view isn’t just helpful, it’s a competitive edge.
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