How Trump's Megabill Will and Won't Change Your Taxes
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Notably, the tax brackets individuals have gotten used to won’t change. The rates set in 2017 will stand at 10%, 12%, 22%, 24%, 32%, 35% and 37%. Many filers especially value the 22% and 24% brackets, which stretch from about $100,000 to $400,000 for married joint filers and half that for single filers. This swath of income at nearby rates can ease planning, such as for Roth IRA conversions or stock-option exercises.
Also retained: the 2017 overhaul’s near-doubling of the standard deduction, which is the amount taxpayers get to subtract from income if they don’t itemize deductions on Schedule A. This fundamental change has simplified taxes for many and reduced the number of itemizers from about 30% of individual filers to less than 10%. Because of a sweetener, the standard deduction for 2025 will be $15,750 for single filers and $31,500 for married joint filers and rise with inflation after that, according to the Tax Foundation.
The legislation also makes permanent the $2,000 child tax credit enacted in 2017—and raises it a bit. Starting in 2025, the base amount will be $2,200 per child, according to the Tax Foundation. It will be indexed for inflation going forward.
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SALT deduction expansion. The new law expands the Schedule A deduction for state and local property, income or sales taxes from $10,000 per return to $40,000 for taxpayers with income up to $500,000 and phases down to $10,000 after that. The provision takes effect for tax year 2025 and expires at the end of 2029.
Charitable donations. The new law has two key changes, and both take effect for tax year 2026. Starting next year, donors will be allowed to deduct $1,000 (single filers) and $2,000 (joint filers) if they don’t itemize on Schedule A. A new limit on charitable donations for itemizers will also take effect next year. It disallows a portion of the deduction equal to 0.5% of a filer’s modified adjusted gross income. So a filer with $300,000 of MAGI would get no deduction for the first $1,500 of charitable donations on Schedule A. Givers who want to avoid it should consider accelerating donations into 2025.
• The “no tax on Social Security” provision has become an extra deduction of $6,000 per person age 65 or older for single filers with income up to $75,000 and joint filers up to $150,000 before phasing out. This is in addition to the regular standard deduction and the additional standard deduction for seniors already in the law.
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