Recent Tax Changes

It’s always a good idea to periodically check how much federal income tax you’re having withheld from each paycheck. This is especially important if your filing status changes because of marriage, divorce or the birth of a child; you or your spouse start or stop a second job; you have taxable income with no withholding (such as retirement income, unemployment compensation, capital gains or self-employment income). We encourage you to use the IRS’s Tax Withholding Estimator to perform a “paycheck checkup” to ensure you have the right amount of tax withheld from your paycheck. The online tool is available at https://apps.irs.gov/app/tax-withholding-estimator. 

An IRS online account makes it easy for people to quickly get the tax planning info they need. With the same ease that taxpayers have when banking online or placing an online shopping order, they can log in and get the latest on their payment history, balance, and more. 

Taxpayers can view information about their account including:

• Their payoff amount, which is updated for the current day 

• The balance for each tax year for which they owe taxes 

• Their payment history 

• Key information from their most current tax return as originally filed 

• Payment plan details if they have one 

• Digital copies of select IRS notices 

• Their address on file 

With an online account, taxpayers can also:

• Make a same day payment 

• Set up an online payment plan 

• Access tax records and transcripts 

• Authorize another person to represent them before the IRS or view their tax records 

• Approve and electronically sign Power of Attorney and Tax Information Authorization requests from their tax professional 

A taxpayer's balance will update no more than once every 24 hours, usually overnight. Taxpayers should also allow one to three weeks for payments to show in the payment history.

Third party settlement organizations (TPSOs), also known as payment apps and online marketplaces will be required to report transactions when the amount of total payments for those transactions is more than $20,000 in 2025.. 

The IRS reminds retirees 73 and older of the year-end deadline for taking Required Minimum Distributions (RMDs) from Individual Retirement Arrangements (IRAs) and other retirement plans. Many owners of IRA accounts and retirement plans are required to withdraw RMDs each year. These withdrawals are taxable income and may incur penalties if not taken on time. RMDs for Designated Roth accounts in 401(k) and 403(b) retirement plans were eliminated by the SECURE 2.0 Act, which also increased the age at which account owners must start taking RMDs. The minimum distribution rules commonly apply to original account holders and their beneficiaries in IRAs, retirement plans and Roth IRAs.

The new digital assets tax form is Form 1099-DA, Digital Asset Proceeds from Broker Transactions, which is used by brokers to report digital asset transactions to the IRS and taxpayers starting with the 2025 tax year (forms issued in early 2026). 

Tax-advantaged educational savings accounts, also known as 529 plans, provide a way for parents to help their children or other family members save for college or to pay other educational expenses. However, not every beneficiary uses the full amount they paid into the plan. Beginning in 2024, the SECURE 2.0 Act allows beneficiaries to roll over unused funds into a Roth IRA without having to pay a penalty. However, there is a lifetime limit of $35,000 per beneficiary and the 529 account must have been open for at least 15 years. The rollover amount cannot exceed the beneficiary’s annual IRA contribution limit.

The premium tax credit (PTC) is available to individuals whose household income is between 100% and 400% of the federal poverty line. H.R.1 significantly impacted health insurance by cutting Medicaid funding, tightening ACA marketplace rules (requiring annual income verification, ending auto-renewal, shortening enrollment), and increasing costs for millions, potentially leaving 10-16 million more uninsured by 2034, while also making some positive changes like permanent telehealth relief for HSAs and increasing Dependent Care FSA limits. Key effects include reduced subsidies, stricter eligibility for premium tax credits, and major Medicaid spending reductions through new requirements and eligibility changes. 

Energy efficient home improvement & Clean Vehicle Credit 

Most clean energy and electric vehicle tax credits are terminated, with various effective dates in 2025 and 2026. 

From 2025 through 2028, a deduction of up to $10,000 annually is available for interest paid on a loan for a NEW, PERSONAL USE vehicle that had its final assembly in the United States. This deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers). The loan must have originated after December 31, 2024. Used vehicles do NOT qualify. To take this deduction, you will need documentation from your lender. A qualified vehicle is a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States. The VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA) provides plant of manufacture information. Taxpayers can follow the instructions on that website to determine if the vehicle’s plant of manufacture was located in the United States. The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.

Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation -- that is required by the Fair Labor Standards Act (FLSA) and that is reported on a Form W-2, Form 1099, or other specified statement furnished to the individual. Maximum annual deduction is $12,500 ($25,000 for joint filers).  Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). Taxpayers must file jointly if married, to claim the deduction. Employers must furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.