Attorney Justin M. Kennedy of Litherland, Kennedy & Associates discusses the key changes brought by the July 2025 tax law and how these updates create new opportunities for proactive tax planning. In this video, he explains which temporary provisions were made permanent, the new provisions scheduled to expire in 2028, and the strategies individuals and families can use now to reduce their tax burden in the coming years.
Justin outlines important tax credits, updated retirement contribution limits, and charitable giving strategies that remain effective even with the increased standard deduction. His goal is to help viewers understand how these changes may affect their tax and estate planning decisions and to highlight planning steps that can provide long-term financial benefits.
Tax law changes enacted in 2025 created new opportunities for taxpayers while also changing several deductions, credits, and retirement planning rules.
Tax deductions and tax credits work differently. A deduction generally reduces the amount of income subject to tax. A tax credit directly reduces the taxes you owe and may provide a greater refund, depending on your circumstances.
Review and Take Advantage of Available Tax Credits
Saver’s Credit
Eligible taxpayers who contribute to certain retirement accounts like an IRA or an employer-sponsored retirement plan may qualify for the Retirement Savings Contributions Credit, commonly called the Saver’s Credit.
The maximum credit is generally $1,000 per eligible taxpayer or $2,000 for married couples filing jointly. Income limits and other eligibility requirements apply.
Earned Income Tax Credit
The Earned Income Tax Credit is available to certain low- and moderate-income workers and families. Eligibility and the amount of the credit depend on your income, filing status, the number of children or dependents you have, and other family circumstances.
Child Tax Credit
The Child Tax Credit helps families with children get a tax break. For 2025, it is worth up to $2,200 per qualifying child under age 17. Income limits and other eligibility requirements apply.
Education Tax Credits
Education Tax Credits help with the cost of higher education. There are two education credits available, but you may only claim one of the credits per qualifying student.
The American Opportunity Tax Credit may provide up to $2,500 per eligible student for qualified higher education expenses during the first four years of postsecondary education. It equals 100% of the first $2,000 of qualifying expenses plus 25% of the next $2,000.
The Lifetime Learning Credit may provide up to $2,000 per tax return for qualifying education and job-skills expenses. Unlike the American Opportunity Tax Credit, it is not limited to the first four years of college.
Review Your Retirement Contributions
Retirement contributions are another important part of year-end tax planning for 2025.
The employee contribution limit for most 401(k) plans increased to $23,500 in 2025.
Participants age 50 or older may generally contribute an additional $7,500 in catch-up contributions. For participants who are ages 60 through 63 during 2025, the catch-up contribution limit is $11,250, which may allow total employee contributions of up to $34,750.
For traditional and Roth IRAs, the 2025 contribution limit is $7,000, with an additional $1,000 catch-up contribution available for individuals age 50 or older.
Contribution limits are only one part of retirement planning. Income limits, plan rules, and tax treatment should also be considered.
Consider Your Charitable Giving Strategy
The standard deduction for charitable giving for 2025 is $15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of household.
Because fewer taxpayers may benefit from itemizing deductions, some people choose to “bunch” several years of charitable gifts into one tax year. A donor-advised fund is one way to do this. You may contribute a larger amount in one year and then distribute charitable grants from the fund over time.
Taxpayers who are at least age 70½ may also want to consider a qualified charitable distribution, or QCD. For 2025, eligible taxpayers may generally transfer up to $108,000 directly from an IRA to qualifying charities. A qualifying QCD may also count toward a required minimum distribution without adding to your taxable income.
Review Your 2025 Year-End Tax Planning
Tax rules can affect retirement accounts, charitable giving, estate planning, and other financial decisions differently depending on your circumstances.
Before the end of the year, consider reviewing your available credits, retirement contributions, charitable giving, and overall estate plan with your tax and legal professionals.
To learn more about how tax law changes may relate to your estate planning goals, visit Litherland, Kennedy & Associates or register for one of the firm’s upcoming estate planning presentations.
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