Key U.S. Federal Tax Law Changes for 2025 (vs. 2024) Relevant to the AICPA Exam
This summary covers adjustments for the 2025 tax year, which taxpayers will file in 2026. It's also crucial to be aware that many individual and some business provisions of the Tax Cuts and Jobs Act (TCJA) are scheduled to expire at the end of 2025, which would lead to significant changes for the 2026 tax year if not extended by Congress.
1. Individual Income Tax Provisions:
| Item | 2024 Tax Year (Filed in 2025) | 2025 Tax Year (Filed in 2026) | AICPA Exam Relevance |
|---|---|---|---|
| Standard Deduction | • Single: $14,600 • Married Filing Jointly: $29,200 • Head of Household: $21,900 |
• Single/Married Filing Separately: $15,000 • Married Filing Jointly: $30,000 • Head of Household: $22,500 *(Additional amounts for 65+/blind also adjusted)* |
Frequently tested; impacts itemized deduction decisions. |
| Tax Rate Schedules | 7 tax rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) with 2024 income thresholds. | 7 tax rates retained; income thresholds for each bracket are adjusted for inflation. For example, the 37% top rate applies to taxable income over $751,600 for MFJ, $626,350 for Single. | Core concept; ability to apply correct rates and brackets is essential. |
| Capital Gains Tax Thresholds | 0%/15%/20% rates based on 2024 taxable income thresholds. (e.g., 0% up to $47,025 for Single) | 0% rate applies to taxable income up to $48,350 for Single filers. The 15% rate applies to income from $48,351 to $533,400 for Single filers. 20% rate applies above that. | Important for investment income taxation. |
| Retirement Plan Contributions | • IRA: $7,000 (+$1,000 catch-up if 50+) • 401(k): $23,000 (+$7,500 catch-up if 50+) |
• IRA: Limit remains $7,000 (+$1,000 catch-up if 50+) • 401(k): Limit increases to $23,500 (+$7,500 catch-up if 50+; note potential SECURE 2.0 changes for ages 60-63). • Roth IRA income phase-out ranges increased. |
Commonly tested, especially regarding AGI limitations and deduction rules. |
| Health Savings Accounts (HSA) | • Self-only: $4,150 • Family: $8,300 (+$1,000 catch-up if 55+) |
• Self-only: $4,300 • Family: $8,550 (+$1,000 catch-up if 55+) |
Relevant for adjustments to income. |
| Flexible Spending Accounts (FSA) - Health | Contribution limit: $3,200 Carryover (if plan allows): $640 |
Contribution limit: $3,300 Carryover (if plan allows): $660 |
Details of employee benefits are often tested. |
| Foreign Earned Income Exclusion | $126,500 | $130,000 (based on some projections, confirm with official IRS figures) | Important for taxpayers working abroad. |
| Alternative Minimum Tax (AMT) Exemption | • Single: $85,700 (phase-out at $609,350) • MFJ: $133,300 (phase-out at $1,218,700) |
• Single: $88,100 (phase-out at $626,350) • MFJ: $137,000 (phase-out at $1,252,700) |
Tested as a parallel tax system. |
| Earned Income Tax Credit (EITC) | Maximum credit amounts and phase-out ranges for 2024. (e.g., $7,830 max for 3+ children) | Maximum credit for 3+ qualifying children increases to $8,046. Other amounts and phase-outs also adjusted. | Key refundable credit; eligibility and calculation rules are important. |
| Child Tax Credit | $2,000 per child; $1,700 potentially refundable for 2024 (filed 2025). | $2,000 per child; $1,700 potentially refundable (confirm official IRS amount, as some sources stated $1,600 for 2023, $1,700 for 2024, likely similar for 2025 prior to TCJA sunset). | Important credit for individuals with children. TCJA expiration will significantly impact this in 2026 if not extended. |
| Adoption Credit | Maximum credit $16,810; income phase-outs apply. | Maximum credit $17,350 (projected inflation adjustment); income phase-outs also adjusted. | Specific credit often tested. |
| Student Loan Interest Deduction | Max deduction $2,500; income phase-outs apply. | Max deduction $2,500; income phase-outs adjusted for inflation. | Common adjustment to income. |
2. Estate and Gift Tax Provisions:
| Item | 2024 Tax Year | 2025 Tax Year | AICPA Exam Relevance |
|---|---|---|---|
| Annual Gift Tax Exclusion | $18,000 per recipient | $19,000 per recipient | Fundamental gift tax concept. |
| Unified Estate and Gift Tax Exemption | $13.61 million per individual | $13.99 million per individual (projected, effectively $14 million rounded by some sources) | Core estate tax concept. TCJA expiration will significantly reduce this amount in 2026 if not extended. |
3. Business-Related Provisions & Other Items:
| Item | 2024 Tax Year | 2025 Tax Year | AICPA Exam Relevance |
|---|---|---|---|
| Standard Mileage Rate (Business) | 67 cents per mile | 70 cents per mile (projected; this is often announced mid-year or late in the preceding year by the IRS) | Important for Schedule C filers and employee business expense calculations (though employee business expenses are currently suspended as an itemized deduction under TCJA for most). |
| Section 179 Expensing | Limit: $1,220,000 Phase-out Threshold: $3,050,000 |
Limits are indexed for inflation, expect slight increases. (Exact 2025 figures to be confirmed by IRS). | Key business deduction, frequently tested. |
| Bonus Depreciation | 60% for property placed in service in 2024 (phasing down from 80% in 2023). | 40% for property placed in service in 2025 (continues to phase down). TCJA made 100% bonus depreciation temporary. | Important for capital asset acquisitions; the phase-down is a key change. |
| Third-Party Payment Platform Reporting (Form 1099-K) | Reporting threshold of $5,000 for calendar year 2024 transactions (transition relief). | The IRS has indicated plans to lower this threshold. For 2025 transactions, the threshold might be lower than $5,000 (e.g., potentially $600 as originally legislated, but subject to further guidance). | Increasingly relevant for gig economy and online sellers; impacts income reporting. |
4. Crucial Context: Tax Cuts and Jobs Act (TCJA) Sunsetting Provisions
While the above are inflation adjustments and specific updates for 2025, it is critical for AICPA candidates to understand that many of the individual income tax provisions enacted by the TCJA are scheduled to expire after December 31, 2025. If Congress does not act to extend these provisions, the following major changes (reversions to pre-TCJA law, generally) will take effect for the 2026 tax year:
- Lower Standard Deduction amounts
- Return of Personal and Dependent Exemptions
- Higher Individual Income Tax Rates (e.g., top rate returns to 39.6%)
- Elimination of the $10,000 State and Local Tax (SALT) Deduction Cap
- Changes to Mortgage Interest Deduction limitations
- Reduced Child Tax Credit amount (e.g., back to $1,000 per child)
- Elimination of the Section 199A Qualified Business Income (QBI) Deduction
- More taxpayers potentially subject to the Alternative Minimum Tax (AMT)
- Reinstatement of Miscellaneous Itemized Deductions subject to the 2% AGI floor
- Significant reduction in the Estate and Gift Tax Exemption amount
While these sunset provisions primarily impact 2026, their impending nature is a significant factor in tax planning and understanding the current tax landscape, making it relevant background knowledge for the exam.
Disclaimer:
• This summary is based on information available regarding inflation adjustments and tax law provisions for the 2025 tax year as of early 2025. Tax laws can change.
• Always refer to official IRS publications and authoritative sources for the most current and precise information.
• The AICPA announces its specific testing policies and the tax law effective dates for each testing window. Candidates should always consult official AICPA guidance for exam content specifications.
