Based on the "One Big Beautiful Bill" (OBBB) signed into law on July 4, 2025, several new income tax exemptions and deductions are in effect for the 2025 tax year (which will be filed in 2026). The law primarily makes permanent many Tax Cuts and Jobs Act (TCJA) provisions while introducing new, temporary tax breaks to offset inflation.
Personal Exemptions.
For tax year 2026, personal exemptions remain at 0, as in tax year 2025. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017 and was made permanent by OBBB.
The Income Tax (Exemption) Order 2025 (“2025 Order”) was gazetted on 13 February 2025 and provides exemption from income tax on various payments from specified Labuan persons. The 2025 Order replaces the existing Income Tax (Exemption) (No. 22) Order 2007 (“2007 Order”) with effect from the year of assessment 2023.
For the 2025 tax year, the basic federal standard deduction (the "basic exemption") increased significantly due to inflation and a special boost from the new One, Big, Beautiful Bill (OBBB), now being $15,750 for Single filers, $31,500 for Married Filing Jointly, and $23,625 for Head of Household, with further additional amounts for seniors and the blind. These figures reflect an approximate 7.9% increase from 2024, with the OBBB law extending the doubled standard deduction.
Yes, the standard deduction significantly increased for the 2025 tax year due to inflation adjustments and a new law, the "One Big Beautiful Bill Act," raising it to $15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of household, with additional boosts for seniors and new deductions for overtime pay also taking effect.
Some of the major tax changes effective from April 1, 2025, are revised tax slabs, rebate of up to Rs. 60,000, revised ITRU deadlines, calculation of partner's remuneration allowable as a deduction and revised TDS/TCS threshold limits. What is the Rebate available under section 87A?
For the 2025 tax year, seniors (age 65+) get a new $6,000 bonus deduction (or $12,000 for couples) under the "One Big Beautiful Bill," stacked on top of the existing senior standard deduction, phasing out for incomes over $75k (single) or $150k (joint), available through 2028, and requires an SSN and joint filing if married.
For tax year 2025, seniors (65+) get a new $6,000 "bonus" federal tax deduction (or $12,000 for couples) under recent legislation, in addition to existing age-based deductions, phasing out at higher incomes (MAGI $75k single, $150k joint) and requiring filing jointly if married to claim the full amount, while some states also offer senior property tax exemptions, like Colorado's temporary reinstatement for recent movers, requiring separate applications.
Higher basic exemption limit – Currently set at Rs. 3 lakh, the basic exemption limit will be increased to Rs. 4 lakh from April 1, 2025 (FY 2025-26), providing additional tax relief to all individual taxpayers.
Employees Must Complete Form W-4 to Claim Exempt Status for 2025. Internal Revenue Service (IRS) regulations permit employees who anticipate no federal tax liability for 2025 to claim total exemption from federal tax withholding provided they owed no federal taxes for 2024.
The annual exclusion amount for 2025 and 2026 is $19,000. The individual and his or her spouse wish to split all gifts made by each other during the calendar year.
For the 2025 tax year, major changes under the "One, Big, Beautiful Bill Act" include making the Tax Cuts and Jobs Act (TCJA) rates permanent, increasing the standard deduction ($15,750 single, $31,500 joint), adding a new $6,000 senior deduction (through 2028), and significantly raising the SALT deduction cap to $40,000, alongside expanded Child Tax Credits and new deductions for tips and overtime, though withholding tables weren't updated for 2025.
To avoid the 22% tax bracket (or any higher bracket), focus on reducing your taxable income through strategies like maxing out 401(k)s and HSAs, deferring bonuses, tax-loss harvesting, smart charitable giving, and strategic asset location, understanding that higher rates only apply to income within that bracket, not your entire income.
Starting January 1, 2025, the One Big Beautiful Bill Act (OBBBA) introduces a federal income tax exemption on designated amount of qualifying overtime pay. The big news is you can deduct up to $12,500 in overtime pay if for most filers (and up to $25,000 if you're Married Filing Jointly).
NO INCOME TAX ON ANNUAL INCOME UPTO Rs. 12 LAKH UNDER NEW TAX REGIME.
For the 2025 tax year, seniors (age 65+) get a new $6,000 bonus deduction (or $12,000 for couples) under the "One Big Beautiful Bill," stacked on top of the existing senior standard deduction, phasing out for incomes over $75k (single) or $150k (joint), available through 2028, and requires an SSN and joint filing if married.
The personal exemption credits increase for 2025 to $153 (formerly, $149 for 2024) for single taxpayers, married taxpayers filing separately, and heads of households and to $307 (formerly, $298 for 2024) for married taxpayers filing jointly and surviving spouses.
Under the new income tax regime for 2025-26, any taxable income up to ₹12,00,000 attracts a full rebate of ₹60,000 (under Section 87A), resulting in a nil tax liability.
Yes, Social Security recipients received a Cost-of-Living Adjustment (COLA) for 2025, but the bigger news is that they are getting a larger 2.8% COLA for 2026, announced in October 2025, which began with January 2026 payments, increasing average benefits by about $56 per month. The 2025 COLA was a smaller 2.5% increase, while the 2026 adjustment reflects moderating inflation, leading to higher payments starting in the new year.
The Social Security Administration (SSA) announced on Thursday, October 10, that the 2025 social security wage base will be $176,100, an increase of $7,500 from $168,600 in 2024. As in prior years, there is no limit to the wages subject to the Medicare tax; therefore, all covered wages are subject to the 1.45% tax.