IRS Shocker: Massive Tax Overhaul Coming in 2025—What It Means for You

Every year, the Internal Revenue Service (IRS) changes to ensure that its tax laws and services are as current and user-friendly as possible for its taxpayers, and 2025 is no different. The Agency, which wants to stay current, will change its 2025 tax filing season from January to April 2025. During this time, the IRS will process over 128 million individual tax returns, emphasizing the need for the agency to stay current and ensure that the process is simple for taxpayers and employees. Last year, the IRS launched a trial program called Direct Submit, which allows taxpayers to submit paperwork online for free.

Development of Direct File:

Direct file was available in 2024 to residents of the following twelve states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming, as long as they had lived and worked in these areas for the entire year of 2023.

This program will be expanded in 2025 to include Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin, bringing the total number of states where it is available to 24. The eligibility rules are the same as last year: you must have lived and worked in these states in 2024.

In 2024, over 140,000 people used the free service, which let them file simple federal tax forms and then connected them to their state’s free tax filing tool to finish the process. Given that the number of states will have doubled by 2025, it is reasonable to expect the program to be able to assist many more taxpayers. IRS Commissioner Danny Werfel expressed happiness with the increase, stating, “We are overjoyed with the improvements to Direct File and the millions of additional taxpayers who will be able to use the program this year.” Our primary goal is to streamline the tax filing process and assist individuals in completing their obligations quickly and conveniently.”

Additional IRS revisions for 2025:

Although these changes will impact the 2026 tax season, they must be announced in advance to provide taxpayers enough time to plan and adapt to the new regulations, but they are still essential to consider.

• One of the most significant changes is revisions to standard deductions for single and married taxpayers filing separately.
• For tax year 2025, single taxpayers and married individuals filing separately will have a standard deduction of $15,000, up $400 from 2024.
• The standard deduction for married couples filing jointly increases to $30,000, up $800, beginning tax year 2024.
• For heads of families, the standard deduction will be $22,500, up $600 from the level for tax year 2024.