Posted on December 5th, 2025

 

Tax rules are changing again, and this round brings more than just fine print.

 

For everyday households, the 2025 updates open up new ways to rethink what you’ve already got, especially if you’ve been saving for school, planning for retirement, or just trying to keep pace with rising costs.

 

If you’ve ever looked at an old college fund or wondered whether your savings are still working for you, these updates might surprise you.

 

And while some changes sound small, the ripple effects can be big, especially with 2025 setting the stage for bigger shifts ahead.

 

Let’s break it down, one move at a time.

 

2025 Tax Rules Every Household Should Be Aware Of

Not every dollar saved for college ends up covering tuition. If you’ve got an old 529 plan gathering dust, the IRS just opened a new door. Instead of letting unused funds sit idle, you might be able to shift them into a Roth IRA for the same beneficiary. There are limits and timing rules, but the big idea is this: money once meant for school can now pivot toward retirement. That’s a major win for households that planned ahead but didn’t end up needing every last cent.

 

Planning for the long term also looks a bit different now, especially for those nearing retirement. If you're 50 or older, you’ve probably noticed that catch-up contributions haven’t changed in years. That’s no longer the case. Starting in 2025, these contributions will automatically adjust with inflation. It’s a quiet change, but a meaningful one. As prices go up, so does your ability to sock away more, tax-deferred. This gives your strategy room to breathe as life gets more expensive.

 

Here’s a look at five key updates to keep on your radar:

• Unused 529 plan funds may now be rolled into a Roth IRA (if the plan is old enough and other conditions are met).

• IRA catch-up contributions for those 50+ will now rise with inflation.

• Emergency withdrawals of up to $1,000 from retirement accounts are now penalty-free (once per year).

• Clean energy upgrades for your home still qualify for a strong 30% credit, with annual limits replacing lifetime caps.

• Crowdfunding income might be taxable, depending on what the funds were raised for.

That emergency withdrawal rule might catch some attention. If a sudden expense pops up, being able to access $1,000 from your retirement without the usual 10% penalty can be a relief. Just don’t treat it like free money. It still chips away at your future, and depending on your situation, taxes could still apply. Think of it as a pressure release, not a fallback plan.

 

If you're upgrading your home with solar panels, energy-efficient windows, or similar projects, the 30% tax credit still stands, and you can now space out improvements year by year to make the most of it. And if you’ve been using crowdfunding for a side hustle or fundraiser, take a minute to label things clearly. The IRS cares about the reason, not just the platform. Documentation matters more than ever.

 

“BIG” REMINDER: 2025 is the FINAL YEAR of the TCJA rules

There’s a quiet countdown happening in the background of your tax life. The Tax Cuts and Jobs Act (TCJA), signed in 2017, is set to expire at the end of 2025. When that happens, a long list of current tax rules could vanish overnight, flipping back to pre-2017 standards. If your financial habits have been built around today’s structure, this matters more than you might think.

 

For starters, the standard deduction, which, by the way, nearly doubled under TCJA, could shrink back down, making itemizing more common again. The cap on state and local tax (SALT) deductions, currently locked at $10,000, may lift or reset, depending on how Congress moves. Tax brackets, child tax credits, and other individual perks could also shift. None of this is certain yet, but the clock is ticking.

 

That makes 2025 a critical planning year. Think of it as your last full lap around the track before the rules might change. If your income has fluctuated, or your deductions have felt tight, now is the time to review your strategy, not coast. Adjust your withholdings, reexamine charitable giving, and revisit how your income is structured. Every proactive step taken this year could soften the landing for 2026.

 

Don’t wait for Congress to decide your next move. Use this year to:

• Map out potential changes to deductions and credits that affect you most

• Run projections under both current and pre-2017 rules

• Check how the SALT cap has impacted your past returns

• Talk to a tax professional about bracket strategy and timing

• Review family-related tax benefits while they're still in effect

Many taxpayers will find that planning under uncertainty is still better than scrambling under pressure. If you're thinking long term, especially about retirement or estate planning, now is the time to act. Use the current laws to your advantage while they’re still available.

 

When tax rules shift, they tend to do so without much warning. The TCJA era brought major benefits for many households, but those advantages aren’t guaranteed to stick. Treat 2025 as your prep year, not your wait-and-see year. The earlier you plan, the more options you’ll have.

 

What To Expect in 2026: Nonitemizer Charity Write-Offs and Possible Auto Loan Interest Deduction

Once the Tax Cuts and Jobs Act phases out at the end of 2025, some familiar rules might return, and a few new ones could appear. While nothing is final yet, there are clear signals about what the IRS may allow starting in 2026. If you're someone who typically takes the standard deduction, there may be more reasons to pay closer attention next year.

 

One of the expected changes is a new charitable deduction for nonitemizers. Right now, only itemizers can write off donations. But under the proposed rules, taxpayers who don’t itemize could still claim up to $1,000 for individuals or $2,000 for married couples filing jointly. This could make small donations more rewarding and bring tax savings to households that normally don’t see any benefit for giving.

 

Another possible shift is the return of personal auto loan interest as a deduction. If this reemerges, interest paid on personal vehicle loans might once again count as an itemized deduction. While not confirmed, this would be a major change for families juggling multiple car payments or long commutes.

 

And there’s ongoing talk of updates to the Residential Clean Energy Credit, which may increase or adjust to reflect new policy priorities and technology.

 

Here are the key changes we can expect in 2026:

• Charitable deductions for nonitemizers (up to $1,000 single, $2,000 joint)

• Auto loan interest may become deductible again for itemizers

• Residential energy credits could receive updates or expansion

Even if these changes seem small, they can have a noticeable effect on your budget. Charitable giving, for example, becomes more appealing when it also brings a tax perk. Similarly, if auto loan interest becomes deductible again, it might make sense to review how you’re financing your vehicles.

 

On the energy front, if you’ve been holding off on upgrades, it’s worth keeping an eye on how the credit rules evolve. Making improvements in phases could help you lock in incentives while spreading out costs.

 

The big takeaway? 2026 could be a reset year, with a few fresh opportunities mixed into the return of older rules. Staying informed means you won’t be caught off guard, and you’ll be better positioned to take advantage of what’s coming next.

 

See How All These Changes Impact You Personally with Sunrise Tax & Accounting

Tax law is shifting, and 2025 offers a window of opportunity before big changes take effect. Whether it’s preparing for a potential rollback of the Tax Cuts and Jobs Act, unlocking new credits, or staying ahead of future deductions, timing matters.

 

Learning how these changes affect your finances isn't always straightforward. That’s why personalized planning now can help you take full advantage of what’s available before it's gone.

 

Want to see how these impact you personally? Book a Tax Strategy Session with Sunrise Tax & Accounting LLC.

 

We’ll walk through the tax updates that matter most to you, clarify what to expect in 2026, and help fine-tune your strategy.

 

Questions or need help right away? Reach out at [email protected] or call us at (816) 456-4324. Let’s make your next move a smart one.