New Tax Credits and Breaks You Should Know About in 2025

Tax law changes every year and 2025 has some important updates that could put real money back in your pocket if you know where to look.

Disclaimer: This article is for general informational purposes only and does not constitute professional tax or legal advice. Tax laws change frequently and vary by individual circumstance. Always consult a qualified tax professional before making financial decisions.

Tax law is not static. Every year brings adjustments, new provisions, and sometimes significant changes that affect what you owe. Staying current is part of what a good tax professional does for you — but knowing the landscape yourself helps you ask the right questions.

Here is what matters most for 2025.

The standard deduction has increased again due to inflation adjustments. For single filers it is now $15,000, and for married couples filing jointly it is $30,000. This annual increase means some people who were on the fence about itemizing last year may now be better off taking the standard deduction instead.

The Child Tax Credit remains at $2,000 per qualifying child under 17, with up to $1,700 refundable. For families in New York City, this is one of the most valuable credits available, and it stacks with the New York State child credit as well.

The Earned Income Tax Credit continues to be one of the most significant benefits for working people with moderate incomes. For 2025, the maximum credit for a family with three or more children is over $7,800 federally. New York State adds another 30% on top of that, and New York City adds an additional 10%. If your income is in the qualifying range and you have children, this credit alone can be the difference between owing and receiving a substantial refund.

For people who received tips or work in service industries, there has been significant political attention on tip income taxation this year. The situation has been evolving and it is worth asking your tax professional about the current rules if tips make up a meaningful portion of your income.

Retirement contribution limits have been adjusted upward. You can now contribute $23,500 to a 401(k) plan, and the catch-up contribution for people 50 and older has increased. IRA contribution limits are at $7,000, or $8,000 if you are 50 or older.

Energy efficiency improvements to your home may qualify for credits under the Inflation Reduction Act provisions that remain in effect. If you installed solar panels, upgraded your heating system, or made qualifying insulation improvements, there may be a federal credit available.

For electric vehicle buyers, the clean vehicle credit of up to $7,500 remains available for qualifying new vehicles, with income limits that determine eligibility. Used electric vehicles may qualify for a smaller credit.

The landscape changes, and what was true last year may not be true this year. The best approach is always to sit down with someone who tracks these changes professionally and walk through your specific situation with current information.

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