IRS releases updated tax numbers for 2026
The IRS releases updated federal income tax brackets and standard deductions for tax year 2026, which apply to returns filed in 2027.
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Did you buy or sell a home in 2025? There’s a lot to consider, especially if you’re a first-time buyer or seller. There are also many changes to tax laws and other financial issues throughout the year, so even non-novices may need a refresher. Keep reading for all kinds of considerations, no matter which side of the deal you’re on in 2025.
2025 tax tips for buying a home
If you bought your first home with a mortgage during 2025, you’ll likely have your taxes in hand at tax time. Unlike rent, mortgage interest and property taxes are generally deductible. And with major tax reforms signed into law this summer, you may be able to take advantage of itemizing your expenses rather than relying on the standard deduction.
The standard deduction in 2025 will be $15,750 for single filers, but $31,500 for joint filers, said Daniel Schomper, wealth manager at Fairway Wealth Management in Independence, Ohio. If you accumulate more tax-deductible expenses over the year, you may want to itemize them.
The White House’s signature tax, spending, and policy bill, widely known as the “One Big Beautiful Bill Act,” increased the amount of state and local taxes that can be deducted from federal income taxes to $40,000. (However, the limit is lower for taxpayers with higher incomes.)
Mortgage interest is also deductible up to $750,000, and mortgage insurance premiums, also known as “private mortgage insurance,” are also deductible.
Whether you’re making your first purchase or your third or fourth time, perhaps the most important thing to keep in mind is maintaining a good record for profitability in 2025 and beyond.
“I want to emphasize how important it is to preserve records,” Shomper says.
This applies to the documents you receive at closing for both home purchases and mortgages. But you should also get into the habit of saving everything related to home improvements, says Vance Barth, founder of national financial advisory firm Your Ddedated Fiduciary.
That’s because when you’re ready to sell your home in the future, you may be able to reduce the amount of capital gains tax you owe by showing that you spent money on applicable improvements.
What qualifies from an IRS perspective?Upgrades that significantly improve the structure and integrity of a home and make it more modern or more livable. Repairs due to normal wear and tear do not count. Consider replacing your roof rather than repairing it, suggests Shomper. The IRS also has this helpful explanation.
2025 tax tips if you sell your home
If you sold a home during 2025, especially one you’ve owned for a while, you may have come away with a lot of cash. Fortunately, homeowners have the right to exempt capital gains from a sale, Barth says.
Single filers can exclude up to $250,000, while taxpayers filing jointly can exclude up to $500,000. Exclusions have some limitations. For example, you must have lived in the home for two consecutive years in the past five years.
However, if you live in your home for a long time, you can easily exceed that amount. In these cases, Barse points out, it’s helpful to be able to show that you’ve made capital improvements. He advises getting into the habit of documenting all upgrades as they occur so you don’t forget anything or have to track down old expenses years later.
Another thing to keep in mind is that unlike assets such as stocks, capital losses that occur when you sell your home will not be applied to your taxes in any way.
