Welcome to another tax season. The IRS announced Monday, January 27, 2025, as the official start date of the nation's 2025 tax season when the IRS will begin accepting and processing 2024 tax returns. For most individual taxpayers, the tax deadline to submit your 2024 tax returns or an extension to file and pay tax owed is Tuesday, April 15, 2025. Here are what you need to know for tax season 2025.
Additional child tax credit (ACTC) amount increased. The maximum ACTC amount has increased to $1,700 for each qualifying child.
Standard deduction amount increased. For 2024, the standard deduction amount has been increased for all filers. The amounts are:
- Single or Married filing separately $14,600;
- Married filing jointly or Qualifying surviving spouse $29,200, and
- Head of household $21,900.
Digital assets received as ordinary income. If you received digital assets as ordinary income, and that income is not reported elsewhere on your return, you will enter those amounts on Schedule 1.
Reporting a transfer of a credit for a new or previously owned clean vehicle credit to a dealer at the time of sale. If you purchased a new or used clean vehicle from a registered dealer and reduced the amount you paid at the time of sale by transferring the credit to the dealer, you must file a tax return and attach Form 8936 and Schedule A to report the transfer of the credit and reconcile your eligibility on your return.
Certain relief payments made to individuals affected by the East Palestine train derailment are not taxable. If you received relief payments from a government agency, Norfolk Southern Railway, or its subsidiary, insurer, agent, or a related person due to being affected by the February 3, 2023, East Palestine, Ohio, train derailment, these payments may be nontaxable.
Qualified wildfire relief payments are not taxable. If you received a qualified wildfire relief payment, those payments may be nontaxable.
IRA contribution limit increased. Beginning in 2024, the IRA contribution limit is increased to $7,000 ($8,000 for individuals age 50 or older) from $6,500 ($7,500 for individuals age 50 or older).
Deferred compensation contribution limit increased. If you participate in a 401(k) plan, 403(b) plan, or the federal government’s Thrift Savings Plan, the total annual amount you can contribute is increased to $23,000 ($30,500 if age 50 or older) for 2024. This also applies to most section 457 plans.
Health flexible spending arrangements (health FSAs) under cafeteria plans. For tax years beginning in 2024, the dollar limitation under section 1251(i) on voluntary employee salary reductions for contributions to health FSAs is $3,200.
New and Updated reporting requirements for Form 1099-K. For 2024, payment card companies, payment apps, and online marketplaces will be required to send you a Form 1099-K when the amount of your business transactions during the year is more than $5,000. In calendar year 2025, the threshold will lower to more than $2,500; and for 2026 and later years, the threshold will be more than $600.
New clean vehicle credit. The credit for new qualified plug-in electric drive motor vehicles has changed. This credit is now known as the clean vehicle credit. The maximum amount of the credit and some of the requirements to claim the credit have changed.
Foreign-source income. U.S. citizens and residents with income from sources outside the United States (foreign income) must report all such income on your tax return unless it is exempt by law or a tax treaty. This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). If you live outside the United States, you may be able to exclude part or all of your foreign earned income.
Foreign financial assets. If you had foreign financial assets in 2024, you may have to file FBAR and FATCA with your return.
For more tax updates, please visit the IRS and California FTB websites.
