2025 Tax Year: What’s New & What to Prepare For

The 2026 tax season for the 2025 tax year is underway. Here’s an overview of key updates, planning considerations, and what to expect as the season progresses.

What’s New for the 2025 Tax Year (High-Level Updates)

Proposed Deduction for New Vehicle Loan Interest

The IRS has released proposed guidance for a new deduction related to interest paid on loans for certain passenger vehicles. If finalized as proposed, the deduction may apply to:

• New, American-made passenger vehicles

• Purchased after December 31, 2024 and before January 1, 2029

• Vehicles used more than 50% for personal use

• Taxpayers who itemize or take the standard deduction

The deduction would be capped at $10,000 per year and would begin to phase out for taxpayers with MAGI over $100,000 ($200,000 for joint filers).

Because these rules are not final, no action is required at this time. This is a future planning consideration for those anticipating a vehicle purchase in the coming years.

New Savings Accounts for Children (“Trump Accounts”)

Recent legislation also created a new tax-advantaged savings account for eligible children under age 18, commonly referred to as a Trump account. The IRS has issued preliminary guidance, with additional regulations expected.

In general:

• Accounts require a Social Security number

• Funds are invested in low-cost U.S. index funds

• Personal contributions are not deductible

• Distributions are generally restricted until adulthood

• Some eligible children may receive a $1,000 Treasury contribution under a pilot program

Personal contributions are not permitted before July 4, 2026, making this a long-term planning consideration rather than an immediate action item.

What to Expect When Dealing With the IRS This Tax Season

One of the most common sources of stress during tax season is interaction with the IRS, so it’s helpful to set realistic expectations about what that process actually looks like.

The IRS today is not the same agency many people remember from a decade ago. Recent years, particularly during the pandemic, exposed long-standing operational issues while also accelerating overdue modernization. Some areas have improved meaningfully. Others remain slow or inconsistent. Understanding the difference can help avoid surprises this year.

The Reality of the IRS Today

The IRS has reduced the worst pandemic-era backlogs, but delays have not disappeared. Paper filings and mailed correspondence still take far longer than most people expect. Even when documents are submitted correctly and on time, it is common to experience long stretches with no visible activity.

In most cases, this silence does not indicate a problem. It simply means the matter is waiting in a processing queue.

Phone service has improved compared to prior years, especially during filing season. Hold times are generally shorter, and callbacks are more common. However, speaking with the IRS does not always lead to immediate resolution. Guidance can vary by representative, and follow-through still depends on backend processing that takes time. This is why documentation and transcript review remain essential.

At the same time, automated enforcement has fully resumed. Balance-due and reminder notices are being issued again at scale and often cross in the mail with payments, amended returns, or other requests that are already pending. These notices may be technically valid but practically premature.

What Is Working Better

Several tools have improved how taxpayers and professionals interact with the IRS.

Online IRS accounts now provide real-time access to balances, payment history, transcripts, and payment plans for both individuals and businesses. This allows activity to be verified without waiting weeks for mailed confirmations.

For many notices, the IRS also offers secure document upload options. When available, this is far more reliable than mailing or faxing documents and reduces the risk of lost paperwork.

The IRS has also begun scanning a significant portion of incoming paper correspondence at intake. While this does not eliminate downstream delays, it has improved routing and tracking compared to prior years.

Where Delays Still Occur

Some challenges remain consistent:

• Automated notices are often issued faster than accounts are updated

• Faxed documents are still manually handled and can be unreliable

• Documents can still be misplaced, making proof of submission critical

Patience and documentation remain key parts of the process.

A Realistic IRS Timeline

For many IRS correspondence matters, a realistic framework looks like this:

• Weeks 1–2: Response or documentation is submitted

• Weeks 3–12: IRS logs and assigns the case

• Weeks 12–20: IRS reviews and responds

• Beyond 20 weeks: Follow-up or escalation if appropriate

Silence during these periods is common and does not typically indicate a problem. Frequent check-ins do not accelerate processing. What does help is having clear timelines, proper documentation, and a plan to escalate only when warranted.

Use of the Taxpayer Advocate Service

You may hear about the Taxpayer Advocate Service (TAS) as a way to “speed things up.” While TAS can be effective in the right circumstances, it is not intended for routine delays.

This option is used selectively, typically in cases of significant hardship, unreasonable delay after documented attempts to resolve an issue, or when normal IRS channels have broken down.

The Bottom Line & When to Reach Out

The IRS today is better than it was at the height of the pandemic, but it remains slow and inconsistent at times. However, with the right expectations and oversight, the process is manageable.

What works best this tax season:

• Relying on transcripts, not just notices

• Using online accounts and secure uploads

• Documenting everything

• Escalating only when appropriate

• Setting clear timelines and boundaries early

Please reach out if:

• You receive an IRS notice you don’t understand

• You’re considering a major change (such as a vehicle purchase, new dependent, or significant income change)

• You’re unsure whether something applies to your situation

If you receive an IRS notice or have concerns, we can review current IRS account data and transcripts to help you understand the status, timing, and next steps.