This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending April 2025.
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Individuals
Social Security wage base and COLA announced for 2026
Individual taxable earnings of up to $184,500 annually will be subject to Social Security tax in 2026, the Social Security Administration said. The SSA also announced a cost-of-living adjustment of 2.8% for both Social Security and Supplemental Security Income benefits for next year.
AICPA seeks IRS guidance on tip, overtime tax deductions for 2025
The AICPA said taxpayers and tax professionals need certainty about how to claim the deductions for 2025. The IRS has said it will not update its forms until 2026.
Annual inflation adjustments announced for tax year 2026
The IRS published annual inflation adjustments for more than 60 tax provisions for tax year 2026, in addition to changes to the standard deduction for tax year 2025.
Transactions between related parties
Limitations on transactions between related parties include restrictions on installment sales of property and potential reallocation of tax benefits of certain personal services corporations.
New legislation seeks to address disaster relief refund claim discrepancies
The TAS Act may ultimately clarify conflicting IRS lookback guidance for taxpayers affected by disasters.
Current developments in taxation of individuals: Part 1
This update surveys recent federal tax developments involving individuals, including
court cases, rulings, and guidance issued during the six months ending April 2025.
IRS keeps per diem rates unchanged for business travel year starting Oct. 1
In its list of high-cost and low-cost localities, the IRS kept per diem rates for travel, meals, and incidental expenses unchanged for the new annual period starting Oct. 1.
Details on IRS prop. regs. on tip income deduction
The proposed regulations define “qualified tips” for purposes of the deduction and contain details on allowable forms of payment.
IRS releases draft form for tip, overtime, car loan, and senior deductions
The IRS on Friday released a draft of Schedule 1-A (Form 1040), a single form that consolidates the calculations of the four temporary deductions for tips, overtime, car loan interest, and seniors that are allowed under H.R. 1.
IRS warns taxpayers: Social media advice can lead to costly penalties
Misleading posts about credits like the fuel tax credit are landing taxpayers in trouble — with fines up to $5,000 for frivolous returns.
Treasury posts preliminary list of jobs eligible for no tax on tips
The list has a variety of occupations that customarily receive tips, including bartenders, dancers, and digital creators.
Tax strategies for highly appreciated undeveloped land
Entity choice, timing, and sale structuring can help real estate investors minimize taxes on a sale of raw land.
Draft 2026 Form W-2 includes boxes and codes for tips and overtime
The IRS said previously that it will not release a new form for 2025, even though the temporary H.R. 1 provisions are effective this year, but it will provide transition relief.
No proceeds from sale of husband’s home to pay tax debts go to wife
A state marital homestead law was insufficient to establish a property interest by a taxpayer whose husband was the home’s sole owner.
5 things to know about tax relief for federal disasters
While the IRS has discretion to provide relief, Sec. 7508A(d) provides a mandatory tax deadline postponement. In either case, the ‘lookback’ limitation period for refunds remains a concern.
AICPA supports bill that lets married domestic violence victims file taxes as single
The bill would empower survivors of domestic abuse or spousal abandonment to file taxes without contacting their abuser.
Tax provisions in the One Big Beautiful Bill Act
The bill extends portions of the Tax Cuts and Jobs Act, provides deductions to eliminate income taxes on certain tips and overtime pay, and addresses other tax priorities of the Trump administration.
Microcaptive insurance arrangements subject to new rules
To protect against certain risks, businesses can create “captive” insurance companies. The final regulations designate certain microcaptive arrangements as reportable listed transactions or transactions of interest.
Senate budget bill would preserve PTET SALT deduction
An AICPA statement after the bill was issued by the Senate Budget Committee lauded lawmakers for “diligent work to reject new tax increases” on passthrough business including CPA firms.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
