Kara Sears
Tax law is an ever-changing field, with new policies and amendments being introduced regularly. Tax rules can change annually, and it is challenging to keep up with the constant updates. These changes can be influenced by various factors, such as political shifts, economic goals, and social needs. With the dynamic nature of tax legislation, it is essential for individuals and businesses to stay informed about upcoming modifications to ensure compliance and optimize their tax obligations. The year 2025, for instance, witnessed several significant tax law adjustments, including IRS updates, potential TCJA extensions, and modifications to tax credits and deductions. As we advance further into 2026, it is anticipated that additional changes will take effect, impacting taxpayers' financial decisions and strategies.
| Characteristics | Values |
|---|---|
| Tax laws can change every year | True |
| Tax laws are permanent | False |
| Tax laws can be amended through a budget reconciliation process | True |
| Tax laws can be amended through a majority vote in the Senate | True |
| Tax laws can be amended through a campaign | True |
| Tax laws can be amended through an election | True |
| Tax laws can be amended through a presidential win | True |
| Tax laws can be amended through Congress | True |
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What You'll Learn
Tax law changes and their impact on individuals and businesses
Tax laws are subject to change every year, and these changes can have a significant impact on both individuals and businesses. In 2024, for instance, a pandemic-related temporary rule allowed more people to take advantage of the Premium Tax Credit (PTC) and get a larger tax break. However, this rule will not apply in 2025, and taxpayers looking ahead to 2026 should expect to pay more.
Another change in 2024 was the introduction of a tax form for those who sell items via apps or digital platforms such as Venmo, Paypal, Facebook Marketplace, Etsy, or Poshmark. If an individual received more than $600 from any one of these platforms, a tax form was triggered. This change brought about by the new tax law will likely have a significant impact on those who rely on such platforms for income.
Businesses and individuals must stay informed about potential changes to tax laws to prepare for any impact on their tax liabilities. For example, in 2025, crypto exchanges will be required to send a new form, Form 1099-DA, for any crypto or other digital asset sales. This change will affect those who transact with cryptocurrency and will require them to keep detailed records to make tax preparation easier.
Additionally, the IRS makes annual inflation adjustments, changing dozens of tax provisions to avoid "bracket creep," where inflation pushes people into higher income tax brackets. These adjustments can have a significant impact on individuals' tax filings, and staying informed about these changes is crucial for effective tax planning.
With so many potential tax law changes, accountants and tax professionals play a vital role in helping clients navigate the complex and ever-changing landscape. They provide clarity, guidance, and strategic advice to ensure compliance and minimize tax liabilities. It is essential for individuals and businesses to seek professional help to understand how these changes may affect their specific situations and make informed decisions.
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$8.25
Strategies for tax and accounting professionals to stay updated
Tax laws are subject to frequent changes, making it challenging to keep up with the latest updates. Here are some strategies for tax and accounting professionals to remain informed and up-to-date:
Utilize Technology and AI-powered Tools:
Advanced AI-powered research platforms, such as Checkpoint Edge with CoCounsel, are incredibly useful for tax professionals. These tools streamline tax research, provide quick answers to complex questions, and help professionals stay current with the latest tax law alterations. They leverage natural language processing to understand queries and deliver accurate, up-to-date information from vast databases of trusted tax content.
Attend Industry Events and Conferences:
Industry-leading conferences, seminars, and workshops offer excellent opportunities for tax professionals to interact with peers, discuss current tax law changes, and gain insights into issues affecting businesses. Events like Synergy, tradeshows, and webinars can enhance their understanding of the evolving tax landscape.
Follow Trusted Sources and Newsletters:
Subscribing to newsletters from professional associations, such as the AICPA (American Institute of CPAs), and following LinkedIn posts from industry leaders help professionals stay informed about tax law changes. These sources provide breakdowns of tax law alterations and help professionals anticipate future changes.
Regular Training and Education:
CPAs are required to undertake a minimum of 40 hours of continuing professional education annually to maintain their licenses. Firms should encourage staff to attend relevant classes and training sessions to deepen their understanding of tax laws and regulations. Holding internal meetings or training sessions can ensure all team members are on the same page and can effectively guide their clients.
Enhance Efficiency with Automation:
Tax and accounting firms can benefit from increasing automation and improving efficiency. Automation and software solutions can reduce manual tasks, allowing professionals to focus on more complex work. This includes adopting tax software that incorporates changes to federal and state tax codes, reducing the need for manual updates.
By implementing these strategies, tax and accounting professionals can effectively stay updated with the dynamic nature of tax laws and provide valuable guidance to their clients.
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Tax relief for people affected by federally declared disasters
Tax laws are subject to change every year, and 2025 is no exception. The IRS makes annual inflation adjustments, and dozens of tax provisions are adjusted to avoid "bracket creep", where inflation pushes people into higher income tax brackets.
In the context of these ever-changing tax laws, the IRS provides tax relief for people affected by federally declared disasters. This includes tax filing extensions and expedited refunds. The IRS also provides resources for disaster victims who need federal income tax forms, publications, and charitable organization information. For instance, the IRS announced tax relief for victims of Hurricane Ian in Florida, North Carolina, and South Carolina.
To determine eligibility for tax relief, individuals can refer to the TAS website, which offers tips on disaster relief and preparedness, including how to protect and reconstruct tax records. Additionally, the IRS provides disaster loss workbooks to help taxpayers compile a comprehensive list of their belongings or business equipment to accurately estimate their losses.
It is important to note that disaster relief is not limited to natural disasters. For instance, the IRS offered relief to those impacted by severe storms, flooding, and tornadoes in several states, including Tennessee, Rhode Island, and Connecticut.
By staying informed about tax law changes and leveraging the resources provided by the IRS and other official channels, individuals and businesses affected by federally declared disasters can navigate the tax system effectively and access the tax relief available to them.
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Changes to the Child Tax Credit (CTC)
Eligibility Requirements:
To be eligible for the CTC, the dependent must meet specific criteria. For the 2024 tax year, the dependent must be under 17 at the end of the tax year and be a son, daughter, stepchild, eligible foster child, sibling, or a descendant of one of these. The dependent must not provide more than half of their support for the tax year, live with the claimant for more than half the year, and be claimed as a dependent on their return. Additionally, they should not file a joint return for the year unless it is to claim a refund of taxes withheld or estimated taxes.
Credit Amounts:
The maximum amount of CTC per qualifying child is $2,000, and the refundable ACTC is worth up to $1,700 per qualifying child. However, the credit amount begins to decrease if the adjusted gross income exceeds $200,000 for individuals or $400,000 for married couples filing jointly. The credit value is further influenced by income levels, with higher incomes resulting in a reduced credit amount.
Recent Changes:
In 2024, the maximum refund for the CTC was capped at $1,700 per qualifying dependent. Additionally, the pandemic-related rule change that allowed more people to take advantage of the Premium Tax Credit (PTC) and receive larger tax breaks will end after the 2024 tax year. For 2025, the child tax credit will remain at $2,000 per dependent, with a maximum refundable amount of $1,700. However, unless Congress passes an extension or alternative legislation, the credit is expected to decrease to $1,000 in 2026, and income eligibility thresholds will also be lowered.
It is important to stay informed about potential changes to the CTC and consult trusted sources, such as the IRS or tax experts, to ensure accurate understanding and compliance with the latest tax laws.
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Changes to tax laws for crypto transactions
Tax laws are subject to change every year, and the same goes for the tax laws surrounding cryptocurrency. In 2024, the IRS and Treasury Department rolled out new regulations that significantly altered the reporting requirements for crypto institutions like Coinbase. These rules, however, did not affect individuals, who have always been required to report income or capital gains from crypto transactions.
From 2025, crypto exchanges will be required to send a new form, Form 1099-DA, for any crypto or other digital asset sales made by their users. This form will provide a clear record of the proceeds from transactions, helping users calculate their taxable gains or losses. It is important to note that these new digital asset tax regulations do not apply to decentralized or non-custodial crypto exchanges.
Starting in 2026, the IRS is changing how digital asset transactions are reported. Crypto brokers like Coinbase will be required to report the gross proceeds from crypto sales and exchanges, as well as the cost basis, on the 1099-DA form. The cost basis is the original value of the cryptocurrency when it was acquired, plus any associated costs like fees. This change will further simplify the process of calculating taxable gains or losses.
It is worth noting that not every cryptocurrency transaction is subject to tax. For example, receiving a loan is generally not considered a taxable event. However, crypto-to-crypto swaps used to facilitate loans may be considered disposals subject to capital gains tax. Additionally, purchasing an NFT with cryptocurrency is considered a disposal and will incur a capital gain or loss.
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Frequently asked questions
Yes, tax laws can change. In fact, they can change every year, with the IRS making dozens of adjustments annually.
In 2024, the American Rescue Plan allowed students with forgiven loan debt to exclude discharged debt from their taxable income. In 2025, crypto exchanges were required to send a new form, Form 1099-DA, for any crypto or other digital asset sales.
It can be challenging to keep up with changing tax laws. It is recommended to seek guidance from tax experts or tax professionals who are up-to-date on the latest tax laws.
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