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The IRS has made a variety of other changes that may affect your tax liability for tax years 2025 and 2026.
Here is a detailed look at these adjustments:
· New “Trump Accounts”
This program provides $1,000 to eligible newborns’ accounts, born in 2025-2028. This is a tax-favored savings account for individuals under 18, with annual contribution limit of $5,000 (inflation-adjusted).
· Higher Estate and Gift Tax Exemption
Permanently increases the federal and gift tax exemption to $15 million per individual (and $30 million for married couples), indexed for inflation after 2026.
· Enhanced Child Tax Credit
Permanently increases the child tax credit to $2,200 per child under 17 years of age (with inflation indexing).
· Expands 529 Accounts
Increases the annual limit for K-12 expenses from $10,000 to $20,000 (starting in 2026). Expenses for tutoring, testing fees, educational therapies, and apprenticeship programs are now covered.
· Individual Charitable Deductions
Created permanent deduction for individuals that do not itemize to claim up to $1,000 (single) or $2,000 (married filing jointly), beginning after December 31, 2025.
· Casualty Losses
Permanently allowed personal casualty losses from both federal and state declared disaster areas.
More highlights of new tax law next week.
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