Recent Tax Changes Every Taxpayer Should Know
the 2025 - 2026 tax updates that could affect your return
Every year, the tax landscape evolves and 2026 will be no exception. Whether you’re a W-2 employee, a freelancer, or a small business owner, staying on top of these updates can mean the difference between maximizing your refund and leaving money on the table. The Internal Revenue Service (IRS) and state governments continue to refine the tax code in response to inflation, digital transactions, and post-pandemic financial realities. Here’s what’s new for the 2025 tax year (to be filed in 2026).
The IRS makes annual inflation adjustments to prevent “bracket creep,” where rising wages push taxpayers into higher tax brackets even though their real purchasing power hasn’t changed.
Here’s what’s changed for 2025 taxes :
- Higher Income Brackets: Each tax bracket has shifted upward by roughly 5%. This means more of your income will be taxed at lower rates.
- Standard Deduction Increases:
- Single filers: $15,100 (up from $14,600)
- Married filing jointly: $30,200 (up from $29,200)
- Heads of household: $22,400 (up from $21,900)
- Retirement Contribution Limits:
- 401(k), 403(b), and similar plans: $24,500 (up from $23,000)
- IRA contributions: $7,500 (up from $7,000)
- Catch-up contributions (age 50+): Remain at $1,000 for IRAs and $7,500 for 401(k)s.
If you have the financial capacity, consider increasing contributions to retirement accounts before year-end to maximize deductions and long-term growth.
Key Updates Include:
- 1099-K Thresholds: Third-party payment platforms such as PayPal, Venmo, and Cash App will now issue Form 1099-K for anyone receiving more than $5,000 in total payments (up from the prior $600 proposal, which was delayed due to pushback). This applies to business transactions, not personal transfers.
- Digital Asset Disclosure: Taxpayers must now check a box indicating whether they received, sold, or exchanged any digital assets (including crypto, NFTs, or stablecoins). Failure to report accurately could trigger IRS scrutiny.
- New Tip Reporting Systems: Employers in hospitality and service industries will begin using updated IRS tip-tracking systems to ensure compliance and accuracy—meaning employees should double-check that tips reported match what’s filed.
Reporting Requirements: More Eyes on Digital Income
The IRS makes annual inflation adjustments to prevent “bracket creep,” where rising wages push taxpayers into higher tax brackets even though their real purchasing power hasn’t changed.
State-Level Updates: Spotlight on Georgia
If you live or do business in Georgia, there are several updates worth noting for the upcoming tax year.
Here’s what’s changed for 2025 taxes :
- Flat Income Tax Transition: Georgia continues its transition toward a flat 5.39% income tax rate beginning in 2025, replacing the previous tiered structure. This simplifies filing and can mean savings for middle and upper-income earners.
- Standard Deduction Alignment: Georgia has increased its standard deduction to align more closely with federal levels. This means $12,000 for single filers and $24,000 for married couples filing jointly.
- Retirement Exclusions: The retirement income exclusion for seniors (age 65+) remains generous at $65,000 per taxpayer, offering continued relief for retirees.
If you’re self-employed or own a business in Georgia, it’s also worth noting that certain economic development tax credits, including job creation and film production incentives, have been extended through 2026.
