Staying informed about annual tax changes is crucial for maximizing your refund and staying compliant. For 2025, several important updates at both the federal and state levels could significantly impact your financial situation.
The tables below summarize the key federal and Pennsylvania tax changes for 2025.
A new federal law, the “One, Big, Beautiful Bill” (OBBB), introduces several key provisions for 2025-2028 .
| Provision | Key Details for 2025 |
|---|---|
| Standard Deduction | Increases to $15,750 (Single), $31,500 (Married Filing Jointly), and $23,625 (Head of Household). |
| New “No Tax on Tips” | Deduction for qualified tips, up to $25,000 annually; phases out at higher incomes. |
| New “No Tax on Overtime” | Deduction for the extra “half-time” pay from qualified overtime, up to $12,500 ($25,000 joint) . |
| New Car Loan Interest Deduction | Deduction for interest on loans for new (not used) US-assembled personal vehicles; maximum $10,000 annually. |
| Enhanced Senior Deduction | Additional $6,000 deduction ($12,000 if both spouses are 65+) for those who meet age and income requirements. |
| Child Tax Credit | The maximum credit increases to $2,200 per eligible child. |
| State and Local Tax (SALT) Deduction | Itemized deduction cap increases to $40,000 ($20,000 if married filing separately). |
🏢 Pennsylvania Tax Updates for 2025
Pennsylvania has also implemented changes that affect individual taxpayers and businesses.
| Category | Update for 2025 |
|---|---|
| Personal Income Tax | New Student Loan Interest Deduction of up to $2,500 on PA-taxable income (reported on Schedule O). |
| Business Taxes | The corporate net income tax rate drops to 7.99%, continuing its phasedown to 4.99% by 2031. Medical cannabis dispensaries can now deduct ordinary business expenses on PA returns. |
💡 How to Navigate These Changes
With so many new rules, taking proactive steps can help you make the most of these updates and avoid surprises.
- Update Your Withholding: The IRS recommends submitting a new Form W-4 to your employer to account for the new deductions and ensure the correct amount of tax is withheld from your paycheck.
- Consult a Professional: The OBBB provisions have specific phase-out rules and eligibility criteria. Consulting with a tax professional can help you understand which new deductions you qualify for and how to claim them correctly.
- Use Official Tools: You can track your federal refund status and access tax transcripts online at irs.gov. Pennsylvania residents can use the mypath.pa.gov portal for similar state-level services.
Please note: This information is based on currently available guidance and is subject to change. For the most accurate and personalized advice, consult directly with Tax Expert : Rufina Megbaje.
💎 Maximize Your Refund with Expert Help
Navigating annual tax law changes can be complex. At Royalty Tax Services, we stay current on all federal and Pennsylvania tax updates to help you:
- Identify every new deduction and credit you’re eligible for.
- Adjust your tax strategy and withholding for the year ahead.
- Accurately prepare your return to maximize your refund.
Let’s turn these tax updates into your financial advantage. Schedule your consultation with Royalty Tax Services today.
- 📍 Visit Us: Harrisburg, PA
- 🌐 Learn More: myroyaltytax.com
- 📞 Call Us: 717-623-2043
