The Internal Revenue Service (IRS) frequently updates its policies to account for inflation, cost of living, and rising prices. While many adjustments for the 2025 tax year have already been announced, some key items remain unchanged. Let’s cut into the three notable aspects of the tax code that are staying the same this year.
Unchanged Items
For the 2025 tax year, the limitation on itemized deductions remains at zero. This policy has been in place since the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, which eliminated the limitation on itemized deductions starting in 2018. As a result, taxpayers can continue to claim their eligible deductions without any caps, providing potential savings for those who itemize instead of taking the standard deduction.
Personal Exemptions
Another carryover from the TCJA is the elimination of personal exemptions. This remains unchanged for the 2025 tax year, with the exemption amount set at $0, just as it was in 2024. This policy shift from 2017 significantly altered the way families and individuals calculate their taxable income.
Lifetime Learning Credits (LLC)
The thresholds for Lifetime Learning Credit (LLC) eligibility also remain unadjusted for the 2025 tax year. The credit begins to phase out for taxpayers with modified adjusted gross incomes (MAGI) exceeding:
- $160,000 for joint filers.
- $80,000 for single filers.
These income thresholds have not been indexed for inflation since 2020. This static benchmark can be a disadvantage for taxpayers whose incomes rise with inflation but do not see an adjustment in eligibility criteria.
What Does This Mean?
The consistency in these areas can simplify tax planning for some, but it may also limit opportunities to lower taxable income. For instance, the static thresholds for the Lifetime Learning Credit may result in fewer taxpayers qualifying as wages and salaries grow due to inflation.
If you’re unsure about how these unchanged provisions impact your tax liability, consulting with a tax professional is a smart move. It’s also worthwhile to stay updated on the numerous adjustments the IRS has implemented for the 2025 tax year.
FAQs
What are itemized deductions?
Itemized deductions allow taxpayers to claim specific expenses instead of taking the standard deduction.
Why are personal exemptions still $0?
The 2017 Tax Cuts and Jobs Act eliminated personal exemptions.
What is the income limit for LLC?
LLC phases out at $160,000 for joint filers and $80,000 for single filers.
Has the LLC income threshold changed?
No, it has not been adjusted for inflation since 2020.
Can LLC be combined with other credits?
Yes, but each credit has unique rules and limitations.
