This is the second in my series of tax updates to get my clients ready for their December Tax Planning Sessions. The One Big Beautiful Bill Act (OBBBA) changes discussed today include…
1 – The Temporary Deduction For Seniors
Beginning in 2025, the OBBBA introduces a temporary personal deduction for qualified taxpayers age 65 and older. This is in addition to the standard deduction and the existing age-based additional deduction.
Qualifying taxpayers are entitled to a new deduction of $6,000. Individuals qualify if they turn 65 by the end of the year, file their tax returns with the social security number (SSN) assigned to them, and have modified adjusted gross income (MAGI) under the threshold. If both spouses are age 65 or older and file a joint return, they may claim a combined additional deduction of $12,000.
The senior deduction begins to phase out once a taxpayer’s MAGI exceeds these thresholds.
• Single Filers. Phase-out begins at $75,000 and is fully phased out at $175,000
• MFJ. Phase-out begins at $150,000 and is fully phased out at $250,000
• MFS Returns are not eligible for the deduction
2 – The Child Tax Credit
Beginning in 2025, the Child Tax Credit (CTC) is increased to a maximum of $2,200 per qualifying child (previously, this amount was $2,000 per child). Starting in 2026, the credit amount will be annually indexed for inflation.
To qualify for the CTC, a qualifying child must be…
• Under age 17
• A U.S. citizen, national, or resident alien
• An individual with a valid SSN issued before the tax return’s due date
Additionally, the credit is subject to limitations if the taxpayer’s MAGI exceeds certain threshold amounts.
• $200,000 for Single Filers, HOH, and other non-joint filers
• $400,000 for MFJ – For every $1,000 (or part thereof) over the threshold, the credit is reduced by $50.
A partially refundable credit, also known as the additional CTC, is also available. For 2025, the maximum additional CTC is $1,700.
3 – The Other Dependent Credit
The OBBBA makes the nonrefundable Other Dependent Credit of $500 permanent.
4 – The Estate And Gift Tax Exemption Increase
The OBBBA makes permanent the increased basic exclusion amounts applicable to Federal Gift and Estate Taxes, originally enacted under TCJA. The following provisions under the OBBBA take effect beginning in 2026.
• The basic exclusion amount is set at $15M per individual, applicable to both lifetime gifts and estate transfers.
• For married couples, the combined exclusion is effectively $30M.
• The excluded amount will continue to be indexed for inflation beginning in 2027.
Let me leave you with this…
Today, December 1st, is the traditional kick off for this year’s tax season. December is also the busiest month of the year for me, because I do tax planning for all of my clients before completing their 2025 returns.
If you haven’t sent in your work for this year, please get to it. The only way I’ll be able to do your tax planning is if I have a nailed down set of Financial Statements from November 2025.
Without those, I won’t have anything to work with to provide the proper advice. So please get your work into us today.
Also, if you’re having difficulties with your current accounting situation, whatever that difficulty might happen to be, we’d love to talk to you. Now is the perfect time for us to work on new cases.
I’m waiting for your call…
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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