2025 IRS Code Updates: Opportunities for the 2024 Tax Year

Let's face it, paying taxes stinks. 

No one likes to think about tax code updates, but the fact is the 2025 tax season is here, things have changed, and you can’t avoid it! 

Failing to plan is planning to fail is a cliche, sure, but it’s the truth. If you don’t work with someone who is familiar with the tax code updates, you’ll leave money on the table now that tax season is rearing its ugly head again. 

There were several tax code updates for the 2024 tax year that W2 (or active 1099) workers and business owners need to know about . 

To help you navigate the murky waters of the 2025 tax season, we compiled a list of the four most important tax code updates from that session. 

Work with your CPA who knows about advanced strategies. Someone with an MBA who can perform Chief Financial Officer functions.  With their help and the information below, you’ll navigate complex tax decisions and make building your financial future seem easy.

#1 Tax Code Updates On Income Brackets

How much you pay in taxes depends on your income and your filing status ( whether you’re single, married, or filing jointly). 

Your income isn’t taxed at a single, flat rate. Instead, it’s divided into tax brackets. You may pay several different tax rates on various parts of your earnings.

The 2024 tax brackets apply to income earned last year (what you’ll report on tax returns filed in 2025):

#2 Standard Deductions Increase For Everyone

The standard deduction allows you to save money on taxes by reducing your taxable income. The standard deduction for married couples filing jointly for tax year 2024 increased to $29,200, $1,500 more than tax year 2023. 

For single taxpayers and married individuals filing separately, the standard deduction is $14,600 for 2024, an increase of $750 from the previous year.

For heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100.

You can also leverage standard deductions by paying your children to work for you (up to the standard deduction amount). Here are some general rules that you should follow if you have children who can work for you: 

• Children have to be doing work for you. 
• Pay your children in a way that is commensurate with their age and the tasks they are doing. 
• Although technically, you don't have to file a tax return for less than $12,950 in wages. It's probably a good idea to do so just so that you have proof that you paid your children in case you get audited. 

Read our article Hiring Your Children Has Monumental Benefits: Decrease Taxes, Increase Profits. It gives you an in-depth look at how you can hire your children, claim an expense for your business, and keep your wealth within your family. 

#3 Safeguard Your Health And Money With HSA Contributions

You can reduce your taxable income by contributing to a health savings account. This account helps you pay for medical expenses. 

The deductible contribution increased to $3,650 from $3,600 for a single person. For families, the HSA deductible went to $7,200 from $7,300. 

Health Savings Accounts (HSAs) are a smart way to save money for medical expenses. Why? Because the money you put in—and use for qualified medical costs—is tax-free.

Before contributing to an HSA, you must meet these requirements:

1. You’re enrolled in an HSA-eligible health plan.
   • For 2024, this means:
     • A deductible of at least $1,600 (self-only) or $3,200 (family)
     • An out-of-pocket max no higher than $8,050 (self-only) or $16,100 (family)
2. You don’t have conflicting coverage.
   • This includes non-HSA-eligible health plans or a full-purpose health care Flexible Spending Account (FSA).
3. You’re not enrolled in Medicare.
4. You’re not claimed as a dependent on someone else’s tax return.

One more “catch”: You can’t contribute unlimited amounts. The IRS sets a cap on how much you can contribute to your HSA. This limit includes contributions made by both you and your employer.

For example, if your 2024 HSA limit is $4,150 and your employer adds $1,000, you can only contribute $3,150. However, if you’re 55 or older, you can also make an extra $1,000 catch-up contribution.

2024 HSA Contribution Limits

• Self-only coverage: $4,150
• Family coverage: $8,300
• Catch-up contribution (age 55+): Add $1,000

Here’s what determines how much you can contribute:

• Whether you have self-only or family health coverage
• Your age (55 or older? You get that catch-up boost!)

#4 Tax Code Updates Means More Money For Your Family  

The 2024 lifetime estate and gift tax exemption surged from $12.92 million to $13.61 million (double for married couples). This shields most people from having to pay federal gift tax.

But if you DO have to pay … For 2024, the annual gift tax limit is $18,000. ( up $1,000 from 2023 since the gift tax is one of many tax amounts adjusted annually for inflation.)

That means you can give your child $18,000 (or $36,000 for couples) to each child, grandchild, or person without filing taxes on the gift.

Key Takeaways

No one wants to think about paying taxes before taxes are due. But, you should plan to keep more money in your pocket and out of Uncle Sam's coffers. 

To hold onto your nest, you must stay abreast of the tax code updates that may affect you in 2025. 

Some critical updates that may affect you as a real estate investor include the changes to:

• Tax brackets
• Standard deductions
• HSA contributions
• Lifetime estate and gift tax exemption