The Internal Revenue Service (IRS) makes numerous adjustments each year to take inflation, growing costs of living, and rising prices into consideration. Not every item has been changed, though.
You might be happy to know what hasn’t changed, even if you may have already observed the big changes that will go into force in the 2025 tax year.
Note that several previously inflation-indexed items are no longer adjusted by statute. Actually, there are three key things that haven’t altered.
IRS items that will not change in the 2025 tax year
In the first place, itemized deductions will not change. Additionally, personal exemptions for the 2025 tax year will not alter. Lifetime learning credits are the third item that won’t alter.
Let’s examine them and determine the current levels.
- Itemized deductions: Once more, there is no limitation on itemized deductions as in tax year 2024. Bear in mind that the limitation on itemized deductions was withdrawn in 2027. Thanks to the Tax Cuts and Jobs Act from that year. So, it has remained unchanged since 2018.
IRS personal exemptions and Lifetime learning credits
- Personal exemptions have also remained unchanged: The 2025 tax year will also have the personal exemptions at 0, just like it was in the tax year 2024. This is another example of the elimination introduced by the 2017 Tax Cuts and Jobs Act.
- Lifetime learning credits: For your information, the Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $160,000 for joint returns and $80,000 for single filers. Therefore, the modified adjusted gross income amount used by American taxpayers to see the reduction in LLC is not adjusted for inflation for taxable years starting after December 31, 2020.
In any case, if you haven’t already, it’s crucial to verify what has changed.
The IRS releases tax inflation adjustments for the 2025 fiscal year.
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