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2025 & 2026 Important Tax law changes that may affect your tax return this year.
No more paper checks Effective September 30, 2025 the IRS will no longer accept paper checks for tax payments or issue paper checks for refunds. For your refund we will need your banking information for direct deposit. If you owe taxes, we will need to either withdraw the tax payment from your bank account when we process the tax return or you will be responsible to go online and make the IRS tax payment via https://www.irs.gov/payments If you need to change your bank account on file you must provide us with a voided check or a copy of the routing number and bank account number directly from the bank. Handwritten bank information will not be accepted. Energy Efficient Improvements Energy efficient home improvement credits are eliminated in 2026. For 2025, you must provide the manufacturer’s certification four-digit qualified manufacturer (QM) code or the 17-digit qualified product identification number for a specific item to take the credit. This is required for:
Itemized Deductions You may be able to itemize or increase your deductions by itemizing in 2025. The state and local tax (SALT) deduction has increased from $10,000 to $40,000 for married filing joint ($20,000 for married filing separate). Provide us:
New Vehicles If you purchased a new vehicle in 2025 and obtained a loan secured by the vehicle, you might be able to deduct the interest paid on the vehicle for personal use. Provide us with the Form 1098-VLI - Owner’s Name, Vehicle Year, Make, Model, VIN, Date Placed in Service, Loan Origination Date, Outstanding Principal Balance, and documentation from the bank for the total interest paid in 2025. Vehicles must be under 14,000 lbs, assembled in the USA https://www.nhtsa.gov/vin-decoder, and no campers, trailers or motorhomes. Maximum deduction is $10,000 (income phaseouts start at $100,000 for single and $200,000 for married filing joint). Clean Vehicle Credit The clean vehicle credit for electric vehicles purchased after 9/30/25 has been eliminated. If you purchased an eligible vehicle prior to then you may be eligible for a credit up to $7,500. Tip Income Some of your tip income could be deductible up to $25,000 (income phaseouts start at $150,000 for single and $300,000 for married filing joint) for workers who customarily receive tip income. The tips deduction is only available to taxpayers with occupations on a list that will be provided by the IRS as “customarily and regularly” receiving tips. https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf This income must be shown on your W2 or 1099 and you cannot file married filing separate. Please provide us with a copy of the final YTD paystub as well. All tip income should be reported even if it is not on your W2. Overtime If you received overtime income, you could receive a deduction up to $12,500 for single and $25,000 for married filing joint (income phaseouts start at $150,000 for single and $300,000 for married filing joint). The deduction will be for the qualified compensation that exceeds your regular rate of pay – the “half” portion of the “time-and-a-half”. Your employer must designate the qualified overtime amount. For the 2026 W-2, Box 12 with a code TT will be used. This income must be shown on your W2 or an employer attachment. Please provide us with a copy of your YTD paystub as well. You cannot file married filing separate. School Teachers and Coaches School teachers and coaches are able to take a miscellaneous itemized deduction in 2026 for the expenses paid on behalf of their students without a limit on the expenses. Keep your receipts and provide us a total paid for the expenses. The first $300 of out-of-pocket expenses are above the line and any remaining expenses on Schedule A as miscellaneous itemized deduction. School teacher’s expenses $300 max for 2025. Charity Even if you are not able to itemize, charitable contributions are now deductible in 2026 up to a max of $1,000 for single filers and $2,000 for married filling joint filers. IRS Search tool to verify tax exempt status: https://apps.irs.gov/app/eos/ Provide us with the receipts/letters with the date and amounts paid and a summary total of all payments made by check or credit card. Donations of items such as Purple Heart or Goodwill are not included in this total and should be provided separately along with receipts that are complete with Charity Name, Address, Description of Items Donated, Date Donated, Thrift Value of Items Donated. Senior Deduction Seniors, age 65 or older, will receive a deduction of $6,000 per individual to offset your social security income (income phaseouts start at $75,000 for single and $150,000 for married filing joint). You cannot file married filing separate. Windfall Elimination Provision (WEP) WEP was a formula that reduced Social Security benefits for those with pensions from non-covered work. The Social Security Fairness Act, signed into law on January 5, 2025, has ended the WEP for benefits payable for months after December 2023. This means individuals who were affected by the WEP and the related Government Pension Offset will no longer have their benefits reduced by these provisions. The one-time, retroactive lump-sum payment received in 2025 may increase your income in the year you receive it. Child Tax Credit Deduction Child Tax Credit deduction is $2,200 per child (income phaseouts start at $200,000 for single and $400,000 for married filing joint). 1099 Reporting 1099 reporting filing requirements increased from $600 to $2,000 in 2026 for those required to receive a 1099-NEC & 1099-MISC. 1099K reporting requirement increased to $20,000 or 200 transactions. Trump Account You can create an account for your child (birth to age 18) or if your child is born between 2025 and 2028 they will automatically be enrolled. You can make contributions up to $5,000 annually to the account and hence you will receive a government $1,000 credit to the account. The earnings will grow tax deferred in the account. An employer can contribute up to $2,500 to the account which counts against the $5,000 but does not create income for the employee. The amount will be shown on the W2. The money in the account must be invested in a qualified mutual fund. Once the child reaches 18 no further investment to the account. Withdraws follow IRA rules and are taxable income. Exceptions such as first-time homebuyer (up to $10,000) and college tuition can avoid early withdraw penalties. The current target for [the government] to open accounts and make the $1,000 contribution for eligible beneficiaries is July 2026. 529 Plan Benefits Enhanced The annual distribution amount that can be used for K-12 education has increased from $10,000 to $20,000 for distributions after July 4, 2025. Qualified expenses include: Tuition (public, private or religious schools), books, supplies, equipment and other curriculum materials, online education materials, tutoring expenses if tutor is licensed, testing fees, and educational therapies for those with disabilities. Also included are costs for post-secondary credentialing programs for skilled trades and vocational programs (CDL, HVAC, lineman, welding, etc…), professional licensing (CPA, law, MD, etc…) and continuing education and testing fees to maintain certification. Health Savings Accounts You can save in an HSA if you are enrolled in an HSA-eligible health plan at work or in the private and public marketplaces. You cannot be enrolled in Medicare and cannot be a dependent on another person’s tax return. Effective January 1, 2026, Bronze and Catastrophic plans will qualify as High Deductible Health Plans, enabling eligible enrollees to open HSAs. An HSA is generally exempt from tax. You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. For 2025, the IRS contribution limits for HSAs are $4,300 for individual coverage and $8,550 for family coverage. The HSA contribution limits for 2026 are $4,400 for self-only coverage and $8,750 for family coverage. Any employer contributions will count toward these limits. If you're 55 or older during the tax year, you may be able to make a catch-up contribution, up to $1,000 per year. Your spouse, if age 55 or older, could also make a catch-up contribution, but will need to open their own HSA. Qualified HSA funding distribution A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. This distribution can’t be made from an ongoing SEP IRA or SIMPLE IRA. For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within the tax year in which the distribution would be made. The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. The distribution isn’t included in your income, isn’t deductible, and reduces the amount that can be contributed to your HSA. You can generally make only one qualified HSA funding distribution during your lifetime. Back Door ROTH Pro-Rata Rule – be aware before you do an IRA to ROTH conversion The pro-rata rule is used to determine how tax-deferred money should be taxed upon withdrawal. You cannot have other IRA accounts that have pre-tax funds (excluding inherited IRAs) by the end of the year. If you have pre-tax funds, the conversion amount is subject to the pro-rata-rule. Contributing funds to non-deductible new IRA account will not avoid the pro-rata rule. An approach to bypass the pro-rata rule: do a “reverse rollover” by rolling all pre-tax IRA funds into a non-IRA-based employer-sponsored workplace retirement plan such as a 401k, 403(b), governmental 457(b) (although the plan must allow for the rollover). 2025 Traditional IRA/ROTH IRA contribution limit is $7,000 and age 50 and older $8,000 2026 Traditional IRA/ROTH IRA contribution limit is $7,500 and age 50 and older $8,600 Gambling Losses New loss limits make gamblers pay tax on gambling income even if losses exceed winnings. Change to the limits on gambling loss deductions for 2026 and beyond, to the lesser of: 90% of the amount of such losses, or the amounts of winnings from such transactions. Example: Winnings are $10,000 and losses are $12,000. The old tax law there would be no tax due on winnings. In 2026, gambling income is $1,000 and is taxable. IR-2025-17, Jan. 17, 2025 updated the frequently asked questions of the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit Dec. 26, 2024 Court halts BOI reporting. through a merits panel weighing the parties’ claims, the Fifth Circuit Court of Appeals vacated the motion to stay the BOI reporting injunction. In other words, FinCEN no longer has the ability to enforce the reporting requirements. FinCEN has stated that filing will remain voluntary, but it is unclear if further delays beyond Jan. 13, 2025, will be provided. IR-2024-312, Dec. 19, 2024 Beginning Jan. 1, 2025, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
IR-2024-294, Nov. 21, 2024 Prevent refund delays by accepting duplicate dependent returns with an IP PIN for 2025 filing season; taxpayers encouraged to sign up for IP PIN, Online Account. February 6, 2024 Maryland Tax Connect! Maryland’s business taxpayers will be able to access a new service: make online payments, update personal information, retrieve tax information, file returns, view filing and tax history, register a business, apply for or renewing business licenses, apply for sales and use tax exemption certificates. Jan 1, 2024 Beneficial Ownership Information Report has to be filed by owners of United States companies. The individuals who ultimately own or control the company will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury. IR-2023-243, Dec. 18, 2023 — New online self-service tool for businesses that expands the business tax account capabilities and eligible entity types. IRS.gov/businessaccount Key tax and retirement provisions in the Secure 2.0 Act IR-2023-12, January 24, 2023 What is a digital asset? 22-07-11 The Maryland State Department of Assessments and Taxation (SDAT) today announced that HB268, which raises the exemption from personal property assessment for all Maryland businesses from $2,500 to $20,000, has taken effect. HB268 took effect on June 1, 2022, and is effective for tax years starting after June 30, 2022, and includes annual filings submitted as early as January 2022. SDAT will automatically adjust assessments of filings that were submitted between January 1, 2022, and June 30, 2022 so that reported business personal property less than $20,000 is not assessed. Late filing penalties previously billed on 2022 business personal property returns reporting less than $20,000 have been abated and filers who have already paid a late filing penalty billed on a return filing reporting less than $20,000 are being mailed a refund check for the penalty paid. Beginning in 2023, filers with a total original cost of personal property less than $20,000 will also be able to self-attest on their Annual Report that their personal property falls within the exemption range and will no longer be required to submit a return detailing their personal property. 22-04-01 Maryland Tax Bills Signed Retirement Income Subtraction, Work Opportunity Credit, and Sales Tax Exemption on Baby & Oral Hygiene Products The Retirement Tax Elimination Act creates a nonrefundable tax credit that offsets Maryland state income tax for a resident who are 65 years of age or older and whose federal adjusted gross income (AGI) does not exceed $150,000 for a joint filer, or $100,000 for a single filer.
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www.irs.gov/paymentsIRS
Refund Status: 800-829-1954 Website to check on Refund Individual Tax Questions: 800-829-1040 Business Tax Questions: 800-829-4933 Contact your local IRS Office by State IRS Payment Options IRS Online Payment Agreement Application Maryland Refund Status: 410-260-7701 or 800-218-8160 Website to check on Refund: Pay Maryland Tax by Credit Card Maryland Online Payment Systems Pennsylvania Telephone: 888-PA-TAXES PA Website to check on Refund Pay your PA Tax Delaware Refund 866-276-2353 Contact Information Website to check on Refund Pay your Delaware Individual Tax To make Payment Arrangements |