2025 - A Year in Review
If there’s one thing taxpayers were reminded of in 2025, it’s that tax law rarely stands still. This year marked the enactment of one of the most consequential tax packages in years, alongside meaningful administrative and procedural changes at the Internal Revenue Service. While not every provision took effect immediately, 2025 reshaped the tax landscape in ways that will matter for years to come.
At the center of these developments was the One, Big, Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. The legislation introduced permanent and long-term changes affecting businesses, individuals, estates, and investment planning. At the same time, the IRS continued its push toward digital administration, including new requirements around electronic payments and expanded online account tools.
This year-in-review outlines what was enacted in 2025, clarifies when changes actually take effect, and highlights what taxpayers should keep in mind as they plan ahead.
Business Tax Changes Under the One, Big, Beautiful Bill Act
For business owners, 2025 delivered long-awaited clarity after several years of phased sunsets and temporary provisions.
One of the most significant changes was the restoration of 100% bonus depreciation. Under the new law, businesses may again immediately deduct the full cost of qualifying property in the year it is placed in service. This provision applies generally to property acquired after January 19, 2025. While not retroactive to prior years, the change reestablishes a powerful incentive for capital investment and cash-flow planning going forward.
The OBBBA also reversed the mandatory amortization of domestic research and experimental expenditures. For tax years beginning after December 31, 2024, businesses may once again fully expense qualifying domestic research and development costs. The law also provides transition and relief provisions related to previously capitalized costs, though the availability and scope of retroactive relief depends on taxpayer size and specific facts. For innovation-driven companies, this shift can materially affect tax liability, earnings, and investment strategy.
Qualified Small Business Stock (QSBS) planning was expanded as well. For QSBS issued after July 4, 2025, the Act introduces tiered, partial gain exclusions for shorter holding periods and increases both the per-issuer exclusion cap and the gross-asset threshold. These changes broaden access to QSBS benefits and may influence how founders and early-stage investors structure equity and exits.
Long-term investment planning also gained certainty through the permanent extension of the Qualified Opportunity Zone program. Previously subject to expiration and redesignation deadlines, Opportunity Zones are now an indefinite feature of the tax code. This permanence provides greater confidence for investors and developers considering multi-year projects in designated communities.
Individual Tax Changes: Relief Now, Planning Later
For individuals, the changes enacted in 2025 are a mix of immediate relief and provisions that take effect in future tax years.
One of the most visible updates is a temporary increase to the state and local tax (SALT) deduction cap. For tax year 2025, the cap is increased above prior limits, providing partial relief for taxpayers in high-tax states. This increase is temporary and subject to future adjustments, making year-by-year planning especially important.
The OBBBA also introduced temporary deductions for qualified tips and qualified overtime compensation. These provisions apply for tax years 2025 through 2028 and are designed to provide targeted relief to workers in service and hourly industries. Eligibility requirements, income limits, and documentation rules apply, underscoring the importance of accurate payroll and recordkeeping.
Not all individual changes take effect immediately. Beginning in tax year 2026, itemized deductions will be limited for higher-income taxpayers by capping the tax benefit at 35%. Rather than reducing deductible amounts outright, this provision limits the tax savings that itemized deductions can generate for taxpayers in the highest brackets.
Charitable giving rules also change beginning in 2026. Starting that year, taxpayers will be able to claim a new above-the-line charitable deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly, even if they do not itemize. At the same time, a new 0.5% floor on adjusted gross income will apply to charitable deductions for itemizers, meaning contributions below that threshold will not be deductible. Together, these changes are expected to encourage more deliberate timing and bundling of charitable gifts.
Finally, the Qualified Business Income (QBI) deduction for pass-through business owners was made permanent. This eliminates years of uncertainty and enables taxpayers to plan longer term for entity structure, compensation strategies, and reinvestment decisions.
Gift and Estate Tax: Long-Term Certainty Returns
Estate planning was another area where the OBBBA brought clarity. Beginning January 1, 2026, the lifetime estate and gift tax exemption will be permanently set at $15 million per individual, indexed for inflation.
This change resolves years of uncertainty around scheduled exemption sunsets. Families can now revisit gifting strategies, trust structures, and succession planning without the pressure of an imminent rollback. While estate planning remains highly individualized, the permanence of the exemption removes a major legislative variable.
IRS Push Toward Electronic Payments
Not all 2025 developments came through Congress. On March 25, 2025, an executive order directed federal agencies to continue modernizing payment systems and reduce reliance on paper checks. In response, the IRS announced changes affecting how certain tax payments and refunds are processed.
Beginning September 30, 2025, many federal payments, including tax refunds, will no longer be issued by paper check. The IRS is also expanding requirements and expectations around electronic payment methods for certain taxpayers. While the exact scope varies by taxpayer type, the broader trend is clear: paper-based payment processes are being phased out.
Taxpayers who historically relied on mailed checks should ensure they have established and tested approved electronic payment options well in advance of deadlines.
IRS Enforcement and Administrative Modernization
Alongside these changes, the IRS continued to modernize its systems in 2025. Expanded online IRS account functionality now allows taxpayers to view balances, notices, and payment history more easily. While the transition has not been seamless, it reflects a long-term shift toward digital interaction.
At the same time, increased funding and improved data analytics continue to shape enforcement priorities. The IRS has signaled an ongoing focus on areas with a higher likelihood of discrepancies, including pass-through income, payroll tax compliance, and large partnership filings. For most taxpayers, this does not mean audits are inevitable, but it does raise the importance of consistency, documentation, and proactive compliance.
Planning Implications Heading Into 2026
Taken together, the changes enacted in 2025 reinforce a familiar lesson: effective tax planning requires a multi-year perspective. Some provisions provide immediate relief, while others reshape planning starting in 2026 and beyond.
Business owners should revisit capital investment timelines, research and development spending strategies, and equity planning. Individuals may want to reassess itemization decisions, charitable giving strategies, and income timing. Families with significant estates finally have a stable framework for long-term planning rather than reactive decision-making.
Final Thoughts
The tax developments of 2025 were broad, consequential, and, in many cases, clarifying. While no single law affects every taxpayer the same way, this year brought permanence to provisions that had long been uncertain and introduced new rules that reward thoughtful planning.
Understanding tax law is less about memorizing individual provisions and more about recognizing how timing, structure, and strategy interact. With careful planning and informed advice, the changes enacted in 2025 can serve as tools rather than surprises.
