2025 Standard Deductions List as Follows: (Other Factors May Vary)

·        Single Filers                      $15,750

·        Head of Household              $23,625

·        Married Filing Jointly            $31,500

·        Married Filing Separately       $15,750

Single or Head of Household get an extra $2,000 for being 65 or older and another $2,000 for being blind.

For Married Couples: An extra $1,600 for each spouse who is 65 or older and another $1,600 for each spouse who is blind.

Seniors have a special bonus deduction of up to $6,000 for individuals ($12,000 for joint filers) with a phase-out for higher-income taxpayers.

2025 Itemized Deductions List as Follows: (Other Factors May Vary)

State and Local Taxes (SALT): You can deduct state and local property taxes, plus either or sales taxes.

·        Married Filing Jointly           $40,000

·        Single Filers                       $20,000

·        Home Mortgage Interest

·        Charitable Contributions

·        Medical and Dental Expenses

·        Casualty and Theft Losses  

Income tax relief and deductions

No tax on tips (Sec. 70201)

New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.

• “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing
• Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
• Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)

Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers. Self-employed individuals in a Specified Service Trade or Business (SSTB) under section 199A are not eligible. Employees whose employer is in an SSTB also are not eligible. Taxpayers must:

• Include their Social Security number on the return
• File jointly if married, to claim the deduction

Reporting: Employers and other payors must file information returns with the IRS (or SSA) and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipient.

Guidance: By Oct. 2, 2025, the IRS must publish a list of occupations that “customarily and regularly” received tips on or before Dec. 31, 2024.

• The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and payors subject to the new reporting requirements.

No tax on overtime (Sec. 70202)

New deduction: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act (FLSA) and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.

• Maximum annual deduction is $12,500 ($25,000 for joint filers).
• Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.

Taxpayers must:

• Include their Social Security number on the return and
• File jointly if married, to claim the deduction.

Reporting: Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.

Guidance: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.

Expanded and restored deductions:

• 100% bonus depreciation: This provision has been permanently restored, allowing businesses to immediately deduct the full cost of eligible new or used property acquired and placed in service after January 19, 2025. Eligible property includes equipment, computers, and software.
• Section 179 expense deduction: The maximum amount a small business can expense has increased to $2.5 million for 2025, with the deduction beginning to phase out if more than $4 million of qualifying property is placed in service.
• Qualified Business Income (QBI) deduction: The 20% deduction for QBI, which was set to expire at the end of 2025, has been made permanent. Phase-out thresholds have also increased for 2026.
• Research and experimental (R&E) expenses: Domestic R&E costs can now be deducted immediately in the year they are incurred. Small businesses can also retroactively apply these rules to expenses from 2022 through 2024 by amending their returns. 

Vehicle expenses:

• Standard mileage rate: For 2025, the rate for business miles driven is 70 cents per mile, a 3-cent increase from 2024. This provides a simplified alternative to tracking actual costs.
• Actual vehicle expenses: You can deduct the business-use percentage of actual vehicle costs, including gas, oil changes, insurance, and repairs.
• Other vehicle expenses: Regardless of which method you choose, you can also deduct the business portion of car loan interest and state/local property taxes, as well as all parking and tolls for business travel. 

Home office and utilities:

• Home office deduction: If you use a part of your home exclusively and regularly for business, you can claim expenses. You have two options for calculation:
• Simplified method: Deduct $5 per square foot of the office space, up to a maximum of 300 square feet ($1,500).
• Regular method: Deduct a portion of actual home expenses (like mortgage interest or rent, utilities, and repairs) based on the percentage of your home used for business.
• Business utilities: Expenses for a dedicated business phone line are 100% deductible. You can also deduct the business portion of internet, mobile phone, and utilities. 

General business costs:

• Advertising and marketing: All costs associated with marketing your business are fully deductible, including website costs, digital ads, and printing business cards.
• Salaries and benefits: Employee wages, salaries, payroll taxes, and benefits (such as health insurance and retirement contributions) are deductible. Payments to independent contractors over $600 require a Form 1099-NEC.
• Business meals and travel:
• Business meals: A 50% deduction applies to business-related meals with clients, and a 100% deduction applies to meals provided for employees, such as office parties.
• Business travel: Travel expenses, including airfare, hotels, and transportation, are deductible if the trip is for a business purpose.
• Rent and interest:
• Rent: Rent for business property, including office space and equipment, is deductible.
• Interest: Interest on business loans and credit cards is also deductible.
• Professional fees and services: Fees paid to attorneys, accountants, bookkeepers, and other professional consultants are deductible.
• Insurance: Most business insurance premiums, including liability, property, and workers' compensation, can be deducted. Self-employed individuals can also deduct health insurance premiums. 

IR-2025-46, April 11, 2025

WASHINGTON ― The Internal Revenue Service today reminded the 1.1 million people who didn’t file their tax year 2021 federal tax returns that they may be eligible for a refund if they file by the April 15 deadline.

The IRS estimates more than $1 billion in refunds remains unclaimed because taxpayers have not filed their 2021 tax returns yet. The state-by-state table below shows how many taxpayers are potentially eligible for these refunds and the average median refund in each state.

There is no penalty for failure to file if a refund is due. However, a return claiming a refund must be filed within three years of its due date for a refund to be allowed. After the expiration of the three-year period, the refund statute generally prevents the issuance of a refund check and the application of any credits, including overpayments of estimated taxes or withholding amounts, to other tax years that are underpaid. If a taxpayer does not file within the three-year window, the money goes to the U.S. Treasury.

It's important to remember that tax year 2021 refunds may be held if taxpayers have not filed returns for 2022 and 2023. In addition, any refund amount for 2021 will be applied to amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or other past due federal debts such as student loans.

Many taxpayers who did not file may be eligible for more

Taxpayers stand to lose more than just their refund of taxes withheld if they fail to file their 2021 tax return. They could also miss out on money from any refundable tax credits, including the Earned Income Tax Credit (EITC), the Recovery Rebate Credit or other applicable credits.

Many low-to-moderate income workers may be eligible for EITC. For 2021, the EITC was worth as much as $6,728 for taxpayers with qualifying children.

The IRS previously reminded those who may be entitled to the Recovery Rebate Credit in 2021 that time is running out to file a tax return and claim their money. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments, also known as stimulus payments, distributed in 2021.

Plan to file? IRS offers options to get key documents

Gathering all the necessary documents and forms to file a return for 2021 may take some time. Taxpayers should start as soon as possible to make sure they have enough time to file before the April 15 deadline for 2021 refunds. Here are some options:

• IRS Online Account. Individual taxpayers can create or access their IRS Online Account on IRS.gov at Online Account for individuals. In addition to Forms W-2, 1095-A and 1099-NEC, people can view key details from their most recent tax return, such as adjusted gross income.
• Request copies of key documents. Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2021, 2022 or 2023 can request copies from their employer, bank or other payers.
• Current and prior years’ tax forms: Tax year 2021 Forms 1040 and 1040-SR and instructions are available on the IRS.gov Forms, instructions and publications page or by calling toll-free 800-TAX-FORM (800-829-3676).

Taxpayers who are unsure if they are required to file a return can visit Do I need to file a tax return? or refer to Publication 17, Your Federal Income Tax (For Individuals).

The IRS reminds taxpayers that there is no penalty for claiming a refund on a late-filed tax return. Direct deposit is recommended as the quickest and simplest way to receive a tax refund.