FEDERAL & STATE TAX LAW CHANGES

  2025 - The One Big Beautiful Bill

• INCOME TAX: The law makes permanent the lower individual tax rates of 10%, 12%, 22%, 24%, 32%, 35%, 37%. It also eliminates personal and dependent exemptions, and some itemized deductions while keeping the doubled standard deduction. Under the bill, the standard deduction for 2025 is $15,750 for single taxpayers, $31,500 for joint filers, and $23,625 for heads of household.
• ESTATE TAX EXEMPTION: Effective as of January 1, 2026, the federal estate and gift tax exclusion and the generation-skipping transfer (GST) tax exemption will increase to $15,000,000 per person. This means that in 2026 an individual can transfer $15,000,000 (increased from $13,990,000 in 2025) free of any federal estate, gift, or GST taxes either during their lifetime or at death ($30,000,000 for married couples, increased from $27,980,000 in 2025). This amount is subject to an annual cost-of-living adjustment such that this $15,000,000 threshold may change in future years.
• CHILD TAX CREDIT: The child tax credit is increased from $2,000 per child to $2,200, and is subject to annual inflation increases. The bill requires the taxpayer claiming the credit, the taxpayer’s spouse, and the child to have Social Security numbers.
• SENIOR TAX DEDUCTION: In place of eliminating taxes on Social Security, Americans 65 or older will see a temporary “bonus” deduction of up to $6,000 on their income taxes. This will be available to single filers making a modified adjusted gross income up to $75,000, or couples making up to $150,000, for tax years 2025 to 2028.

2025 New Tax Rules For Nonprofits and Charitable Donors 

• Charitable Deduction for Non-Itemizers: Taxpayers who do not itemize can now deduct up to $1,000 (individuals) or $2,000 (married couples filing jointly) per year for cash donations to qualified charities. This deduction does not apply to contributions to donor-advised funds.
• Permanent 60% AGI Limit for Itemizers: The temporary 60% limit for cash gifts to public charities, introduced in 2017, is now permanent.
• New Limits and Reductions for Itemized Charitable Deductions: Itemizers can only deduct charitable contributions that exceed 0.5% of their adjusted gross income. Those in the highest tax bracket will see a reduction in their total itemized deductions.
• Corporate Giving Faces a New Floor: Corporations may now only deduct charitable contributions that exceed 1% of taxable income. The 10% annual cap on corporate charitable deductions remains unchanged.
• New Tax Credit for Scholarship Donations: Individuals can now claim a tax credit of the greater of $5,000 or 10% of AGI for gifts to qualified scholarship-granting organizations supporting K–12 students.

  2025 - RHODE ISLAND - “Non-Owner-Occupied Property Tax Act" 

• Effective July 2026, imposes a new statewide tax on non-owner-occupied residential properties with assessed values of $1 million or more.  The tax applies to owners of residential properties that fall into a certain criterion: (i) assessed value of $1 million or more as of December 31 of the tax year; (ii) not serve as the owner's primary residence; and (iii) the owner does not occupy the property for a majority of days during the tax year. 
• The tax rate is set at $2.50 for each $500 of assessed value above $1 million. The tax will be due and payable in four (4) equal installments (September 15, December 15, March 15 and June 15). Beginning July 1, 2027, the $1 million threshold will be adjusted annually based on the Consumer Price Index for All Urban Consumers (CPI-U), with adjustments compounded annually and rounded up to the nearest $5 increment. In addition, the threshold can never decrease from the prior year.
• Exceptions: The law has its exceptions and the tax will not apply to properties that are rented for more than 183 days during the prior tax year and are subject to Rhode Island's landlord-tenant law. However, those utilizing one of the exceptions will need to meet stringent record-keeping requirements (rental agreements, rent payments, bank statements for residential expenses, utility bills, and any other records). This includes the maintenance of records necessary to determine tax liability for three (3) years following the filing of any required return or until any litigation or prosecution is resolved. These records must be made available for inspection by the tax administrator or authorized agents upon demand during reasonable business hours.