Navigating the 2025 Tax Changes: Credits, Deductions, and Key Deadlines

1. Big Tax Changes on the Horizon

Some of the individual tax provisions from the Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025, unless new laws extend or adjust them. For high earners, these changes can really move the needle on your tax bill. Here’s what to keep in mind:

• Income Tax Brackets
  If no action is taken by Congress, brackets could shift back to higher rates, meaning you might owe more come tax time.
• Standard Deduction Levels
  The bigger standard deduction that’s currently in place may shrink. If that happens, more people—especially those with larger mortgages or charitable contributions—might find that itemizing becomes more attractive again.
• Estate Tax Threshold
  The estate tax exemption is currently historically high. Without any updates, it may drop to about half its current level after 2025, placing more estates in the crosshairs of federal estate tax.

Even if you’ve got a solid financial plan, it’s a good idea to touch base with your tax and Allworth financial advisor regularly. They’re keeping an eye on any new developments and can help you steer clear of surprises.

2. Tax Credits That Might Work in Your Favor

Tax credits directly lower the amount of tax you owe, which can be a game-changer for keeping your overall liability down. While a good number of these credits target middle-income earners, there are still a few that might also benefit high net worth investors:

• Clean Energy & Efficiency Credits
  If you’ve chosen to “go green” and install solar panels or other energy-efficient upgrades to a second home, you may qualify for certain tax incentives. Rules can vary from year to year, but 2025 should see continued support for select renewable energy projects.
• Business & Investment Credits
  For those who own businesses or invest in startup ventures, keep tabs on credits tied to research and development or specific tech adoption programs. These can reduce your overall business tax, and sometimes flow over to your personal return.

Because these credits can come with detailed paperwork and eligibility rules, you’ll want to work closely with your CPA or a specialized tax professional to ensure everything’s filed correctly

3. Key Deductions & the SALT Cap

High-income households often see the biggest shifts in their itemized deductions, and the possibility of the standard deduction shrinking in 2026 makes this even more relevant:

• State and Local Taxes (SALT)
  At the moment, there’s a cap on how much in state and local taxes you can deduct on your federal return. For those in high-tax states, this cap has been a sticking point for a few years now. If the cap stays as is, strategic timing of property tax and other payments can help. If the rules change, you’ll need to adjust accordingly.
• Charitable Contributions
  Charitable giving remains a smart way to lower your taxable income while doing some good in your community (or beyond). High earners might consider donor-advised funds or, if you’re over 70½ with an IRA, qualified charitable distributions. These strategies can make a meaningful impact on your tax bill and support causes you care about.

4. Estate & Gift Tax Planning

A potential drop in the federal estate and gift tax exemption is one of the more significant changes lurking beyond 2025. If you’ve built up a sizable estate, you’ll want to keep these points in mind:

• Lifetime Gifting
  Gifting assets now, while the exemption is high, can reduce the taxable value of your estate later on. That’s especially handy if you’re passing along assets expected to appreciate over the years.
• Irrevocable Trusts
  Trusts like Dynasty Trusts or Spousal Lifetime Access Trusts (SLATs) can help move assets out of your estate. Getting these structures in place before the exemption potentially shrinks might lock in significant tax savings.
• Portability
  For married couples, remember that you can often carry over one spouse’s unused estate tax exemption to the surviving spouse. It’s a useful tool, but making sure your documents are set up properly is essential.

5. Deadlines You Won’t Want to Miss

Staying organized with your tax deadlines can save you a lot of hassle (and penalty fees). Here are the big ones:

• April 15, 2025
  This is your normal deadline to file your federal return or request an extension—though remember, an extension to file is not an extension to pay.
• Quarterly Estimated Taxes
  If you earn a good chunk of income from a business or investments, keep track of your quarterly payments: April, June, September, and January (the following year). Underpayment can lead to extra penalties.
• Estate Plan Check-In
  Sometime late in 2025 or early in 2026, it’s worth revisiting your estate plan. Adjust trust language and make gifts before the exemption possibly drops.

6. Smart Moves for High Net Worth Investors

1. Schedule Regular Check-Ins
   Talk with your tax pros and Allworth financial advisor often. They’ll know about any last-minute changes in Washington that might affect your bottom line.
2. Assess Your Deduction Approach
   With possible changes to the standard deduction, get a sense of whether itemizing might give you bigger savings.
3. Review Your Gift & Estate Game Plan
   Don’t wait until December 2025 to figure out how best to use today’s higher exemptions. Early planning can lock in sizable advantages.
4. Explore Tax-Efficient Investment Options
   Consider IRAs, Roth conversions, or funds that aim to limit capital gains. A well-structured portfolio can do wonders for tax efficiency.
5. Keep Your Options Open
   Legislation can shift, so stay nimble. A plan that works today might need a tune-up next year.

At Allworth, we value foresight and careful stewardship of your assets. By getting familiar with the 2025 tax changes and tapping into our professional advice, you can help ensure your financial house stays in good shape for years to come.

As always, we’re here to guide you every step of the way. After all, the better prepared you are, the more you can focus on the things that matter—like family, community, and enjoying the peace of mind that comes from a solid financial strategy.

This information is meant for educational purposes and not as direct tax or legal advice. Rules and regulations can shift anytime, so it’s always best to consult a qualified tax advisor, CPA, or attorney for guidance tailored to your specific situation.