Breaking News: Key Tax Credits for EVs adn Home Energy efficiency Set to expire, Impacting Consumer Decisions
Financial advisors are urging clients to act swiftly as meaningful tax credits for electric vehicles (EVs) and energy-efficient home improvements are slated for expiration. The $7,500 credit for new EVs and the $4,000 credit for used EVs will cease to be available after September 30, 2025. Similarly, tax incentives for homeowners undertaking energy-saving upgrades, such as installing rooftop solar, electric heat pumps, or energy-efficient windows and doors, will end after December 31, 2025. Advisors are advising clients who are considering these purchases or upgrades to complete them before these deadlines to take advantage of the available tax benefits.
Charitable Deductions Face New Complexities in 2025
The upcoming tax year will introduce new considerations for charitable giving. For individuals who do not itemize deductions, a deduction of up to $1,000 for singles and $2,000 for married couples will be permitted.However, for those who do itemize, charitable contributions will only be deductible to the extent they exceed 0.5% of their modified Adjusted Gross Income (AGI). For instance,if a client’s modified AGI is $100,000,their deductible charitable contributions would need to be greater than $500,with maximum limitations still in place.
advisors are highlighting that the decision-making process between itemizing deductions and claiming the standard deduction will become more intricate in 2025. Clients impacted by multiple tax law changes, including a possibly higher standard deduction, an increased State and Local Tax (SALT) limitation, a senior bonus deduction, and the aforementioned charitable contribution rules, are encouraged to collaborate closely with their certified public accountants to navigate these complexities effectively.
The current tax legislation introduces a wide array of changes beyond those detailed here, impacting various aspects of financial planning. This overview aims to provide advisors with a focused understanding of the most significant tax areas that could directly influence their clients. Proactive planning and a thorough grasp of these evolving provisions will be crucial for positioning clients favorably for the upcoming tax year. As these changes are fully implemented, further detailed guidance will become available. Continuous collaboration among advisors remains essential for providing optimal client service.
the opinions expressed herein belong to the author and do not necessarily reflect those of Morningstar. Morningstar supports a diverse range of perspectives.
