More than three-quarters of Americans 50 and older say they want to remain in their homes after they retire, but sharp increases in property taxes have made aging in place unaffordable.

Unlike income taxes, which often decline in retirement, property taxes are based on the value of your home — and in many parts of the country, assessed values have skyrocketed in recent years. Median property taxes rose by an average of 10.4% between 2021 and 2023, according to an analysis of the latest data available by LendingTree, an online marketplace for consumer loans. The median property tax in 2023 was nearly $3,000 ($2,969), but median property taxes in 50 metropolitan areas ranged from $1,091 to nearly $10,000, according to LendingTree.

Before writing a check for your next property tax bill, make sure you take full advantage of property tax relief programs offered by your state or locality. While more than 9 million Americans likely qualify for property tax relief, only about 8% apply for it, according to the AARP. “Many aren’t aware these programs exist or assume they’re not going to qualify,” says Nicole Heckman, vice president of well-being for the AARP Foundation.

The types of property tax relief available vary, not only by state but by individual counties and jurisdictions. Many states and jurisdictions offer expanded relief to homeowners who are 65 or older; some offer breaks to homeowners who are 61 and older. Veterans and residents with disabilities may also qualify for a reduction in their property taxes. While eligibility is often income-based, the income thresholds “can be pretty expansive,” Heckman says, so don’t assume you earn too much to qualify. In New Jersey, for example, homeowners with incomes of up to $500,000 are eligible for reimbursement of a portion of their property tax bill.

Tax relief isn’t automatic. In most cases, you must fill out an application and file it by a deadline set by your locality or state. Some jurisdictions require you to apply in person. Other states and localities allow you to apply online, but that can be challenging for older adults who don’t have broadband internet, Heckman says.

The AARP Foundation’s Property Tax Aide program, now in its fifth year, allows homeowners to research more than 140 programs in 50 states and Washington, D.C. Users can find details on eligibility, deadlines and where to get help. The average amount of relief provided through the program is $400, but some users have saved up to $1,000, Heckman says. Many states allow eligible homeowners to apply for up to three years of back tax relief, she says. “That can be a significant credit or refund.”

Some types of relief states and localities offer homeowners:

1. Tax credits and refunds

More than a dozen states offer property tax credits or refunds to eligible older adults in amounts ranging from $250 to $2,730. Pennsylvania provides rebates ranging from $380 to $1,000 for eligible older and disabled residents. Tennessee refunds all or a portion of property taxes paid by eligible residents.

Minnesota provides two types of property tax refunds: one based on homeowners’ income and the amount of their property taxes, and another based on how much residents’ property taxes have increased. (Some residents qualify for both, and the program isn’t limited to older adults.) Cindy Rieck, 68, of Pequot Lakes, Minn., whose home has nearly doubled in value since she purchased it in 2007, says she received a refund of $1,200 in 2024.

2. Expanded homestead exemption

Property taxes are based on the assessed value of your home, which may differ from its appraised or market value. A homestead exemption lowers the assessment, thus reducing your property tax bill. Most states offer some kind of homestead exemption for residents, but many states provide an additional homestead exemption for older adults.

Florida, for example, allows residents to exempt up to $50,000 of their home’s assessed value from property taxes (which will increase with the rate of inflation starting in 2025), but jurisdictions in the state have the option of providing an additional $50,000 exemption to eligible homeowners 65 and older.

Texas recently increased its homestead exemption to $140,000 for all residents. The state provides an additional $60,000 exemption for residents age 65 or older, for a total combined homestead exemption of $200,000. Texas now allows individual jurisdictions to add $3,000 to that amount.

3. Assessment freeze

In Arizona, homeowners ages 65 or older who have lived in their primary home for at least two years and meet income limits can have their property’s valuation frozen for three years. New Jersey has a “senior freeze” program that reimburses property tax increases for eligible residents who have owned their homes for at least three years.

4. Tax deferral

Illinois allows eligible homeowners 65 and older to defer up to $7,500 of property taxes on their principal residence. California, Maine, Minnesota, Vermont and Washington also allow eligible older adults to defer property taxes.

If you sign up for deferral, the state or locality will place a lien on your home; the taxes must be paid, usually with interest, after you die or sell the home. That’s important to consider when planning your estate. If your heirs sell the home, the back taxes will reduce the amount they’ll receive from the proceeds, and if they want to keep it, they’ll be on the hook for the taxes you deferred. “If you can afford it, you may decide you’d rather pay the tax now and not have something your heirs will have to worry about when they sell the property,” says Jared Walczak, vice president of state projects at the Tax Foundation in Washington, D.C., a tax-policy research organization.

Other options to cut your tax bill

Applying for property tax relief is just one way to lower your tax bill. Other options that may be available to you:

Claim a deduction
The One Big Beautiful Bill Act, signed into law in July, allows homeowners to deduct up to $40,000 in state and local taxes, up from a cap of $10,000. The provision takes effect in 2025 and expires in 2029. The legislation also expanded the standard deduction for eligible taxpayers 65 and older, so for many older adults, claiming the standard deduction will still provide the lower tax bill. However, if you live in a high-tax state and have other deductible expenses — large charitable contributions, for example — it’s worth running the numbers with your tax preparer or on a tax software program to determine whether you should itemize on your 2025 tax return.

Challenge your property tax bill
If you believe your assessment was inaccurate or outdated, you may be able to lower it by filing an appeal. Review your property’s record card, usually available on your locality’s website or by request. If you find an obvious error — four bedrooms instead of two, for example — your assessor may agree to lower the assessment on the spot.

If the information on your property’s record card is correct but you believe your assessment was higher than those for comparable homes in your neighborhood, you can use that information to file an appeal. Check your local government’s website for deadlines and procedures. Realtor.com offers a tool that will provide you with an estimate of the market value of your home, along with estimated values of other homes in your neighborhood. The tool is free but you must create an account to use it.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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Back-to-school season is just around the corner, and over a dozen states are hosting tax-free holidays to help you get prepared.

Sales tax holidays, which start as early as this month (July) and last through August, can give shoppers a chance to purchase select items tax-free. These generally include school supplies, clothing, electronics, and food. Some states even exempt sales taxes on furniture, plants, and other household items, which is ideal for those going back to college.

Planning to shop during a sales tax weekend can be a good idea this summer, particularly as tariffs are driving up inflation.

Some major retailers like Walmart and Apple are simplifying the shopping experience for folks in participating states with a tax-free holiday by offering an online catalogue of qualifying items.

Here’s what you need to know about upcoming sales tax holidays in your state.

Apple back-to-school 2025 tax-free holiday

This summer, 17 states are celebrating sales tax holidays. However, not all will let you get a tax break on electronics for back-to-school or personal use.

Only ten states are offering a tax exemption on computers and related electronic accessories this summer, so you can jump into the new school year fully equipped.

Each state has different rules when it comes to which electronic items qualify for the sales tax holiday, and some have price limits on the items you can purchase under the exemption.

If you’re a fan of Apple, and your state is participating in a tax-free holiday this summer, you can shop online or in-store to purchase at a bargain price during the following select dates.

Snag deals tax-free at Walmart this summer

If you’re looking to purchase items other than electronics tax-free this summer, Walmart can be a good place to shop for school supplies, snacks, and clothing to get ready for the back-to-school season.

• A composition notebook worth $0.97 will cost you 50 cents.
• You’ll save a $1 on a box of Crayola colored pencils, and pay just 97 cents.
• Dry erase markers are worth $13.23, saving you $8.12.

You can purchase qualifying items during your state’s tax-free weekends, and Walmart will automatically apply the sales tax exemption whether you shop online or in-store.

Shoppers in 17 states, plus Puerto Rico, should keep track of the following dates so they don’t miss out on potential savings.

Participating states during Walmart’s tax-free holiday savings include Alabama, Arkansas, Connecticut, Florida, Iowa, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

For more information, see our guide on Sales Tax Holidays in 2025.

Why shop during a tax holiday

Sales tax holidays offer shoppers an opportunity to purchase a wide range of products free of tax. That can make a huge difference, since some participating states have among the highest sales tax rates in the country.

For example, in Tennessee, the statewide sales tax averages 7%, but average local taxes increase the combined sales tax rate to 9.556%. The state also imposes a grocery tax, so any break on taxes is a good reason to shop at a bargain.

Target, Walmart, and other major retailers are bracing for potential price hikes this summer, given that the Trump administration’s sweeping tariff pause is set to end mid-August. Now could be the right time to buy before prices soar.

Most tax-free holidays start as soon as late July, so don’t miss out on some potential savings at checkout as you get ready for the back-to-school season.

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President Donald Trump is urging Republicans in Congress to pass a comprehensive legislative tax policy package, and your eligibility for certain family tax breaks could change.

The measure aims to bundle Trump’s main policy goals into “one big, beautiful bill” and contains major policies including spending cuts, border security, and energy reforms. It would also address expiring tax breaks in the Tax Cuts and Jobs Act (TCJA), a law slated to sunset by the year-end.

A deficit of revenue to fund the mega-bill, which economists and policymakers argue benefits the wealthy, has caused GOP lawmakers to scramble and devise revenue plans, including looking at radical tax cuts.

A 50-page policy menu prepared by the House Budget Committee was obtained by Politico, listing a flood of tax policies at risk of getting gutted or redrawn by the GOP.

The cuts collectively amount to over $5 trillion and include key family tax breaks that help sustain low- to moderate-income families across the country.

Here are some tax breaks in danger of being reduced or gutted entirely.

What’s happening to the Head of Household filing status

House Republicans aim to make the nearly doubled standard deduction created by the Tax Cuts and Jobs Act (TCJA) permanent. The provision, notably, would further increase the standard deduction by including an extra year of inflation adjustment.

Under the GOP’s proposal, the “head-of-household” filing status, which offers lower tax rates and a higher standard deduction for unmarried taxpayers who have children or are caring for a loved one, would not be eliminated.

For tax years 2025 through 2028, the standard deduction amount for those with a head of household filing status would increase by $1,500. According to estimates from the Joint Committee of Taxation, if this provision passes, it would increase the standard deduction amount in 2026 from $12,150 to $24,500.

Worth noting: A leaked GOP budget memo indicated that repealing the head of household filing status would result in $192 billion in savings over the next decade. The measure would have penalized single parents raising children or adults claiming a dependent on their own.

Parents need a Social Security number to claim the Child Tax Credit

Vice President JD Vance once floated the idea of expanding the federal Child Tax Credit during the 2024 campaign, but this provision seeks to reduce its reach substantially.

The federal child tax credit is a key tax break that provides qualifying households up to $2,000 per qualifying child under 17. As a partially refundable credit, if the CTC exceeds taxes owed, families may receive up to $1,700 per child as a refund for the 2024 tax year.

Unless Congress acts before the year-end, the child tax credit is set to revert to $1,000 per qualifying child in 2026. The age limit for qualifying children would also decrease to 16 due to expiring provisions from the TCJA.

According to the White House, before the page was temporarily unavailable under the new administration, the CTC was available to 40 million U.S. families each year.

That number is thanks to rules that currently allow taxpayers to claim the child tax credit as long as the child has a valid Social Security Number (SSN), even if the parent or guardian doesn’t have one.

The GOP proposal would require parents and children to have a Social Security Number to claim the CTC. This would yield $27.7 billion over the 10 years.

As reported by Kiplinger, Trump’s tax plan for the child tax credit would temporarily increase the credit amount to $2,500 through 2028. The credit would decrease to $2,000 for subsequent tax years. Additionally, the maximum refundable portion of the CTC wouldn’t exceed $1,400 per qualifying child (subject to inflation).

Require SSN for the American Opportunity Tax Credit

If you, your child, or your spouse expect to get some savings for pursuing a higher education, the requirements to claim this tax break are changing.

The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. For 2024 (taxes typically filed in 2025), taxpayers get a maximum annual credit of $2,500 per eligible student.

Some qualifying expenses include tuition, required enrollment fees, or course materials such as books or supplies.

Under current law, to qualify for the credit, you must submit a taxpayer identification number (TIN) or an adoption taxpayer identification number (ATIN). Under Trump’s tax proposal, the person applying for the AOTC must have a Social Security Number to be considered eligible for the tax break.

A released budget memo from Republican lawmakers showed that eliminating the AOTC would yield $59 billion in 10-year savings. So far, it seems like the credit will stick around if Trump’s legislative package is successful. However, its reach will be limited by the new requirement.

Bottom line on GOP tax cuts

Family tax credits aren’t the only tax policies at risk of being eliminated or reformed under the GOP’s watch.

Republican lawmakers also singled out a laundry list of tax policies that they can potentially pull revenue from, including but not limited to:

• Eliminating or rewriting eligibility standards for certain education tax credits
• Capping SNAP maximum benefits
• Ending taxes on overtime
• Eliminating taxes on tips, and more

No matter the size of your household, some of these changes can impact you directly. So, stay tuned for more information as this is developing news.

Related Content:

• Child Tax Credit: How Much Is It for 2024 and 2025?
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Living in a mobile home or condominium in New Hampshire won’t save you money this year.

Residents in Rochester experienced a dramatic spike in their tax property tax bills — with some seeing bills nearly triple following city-wide property value reassessments. What’s caused ire for many locals is that mobile home values shot up by 208%, while condo values rose 94% compared to a year ago. Meanwhile, single-family homes saw values increase by 73%.

One property manager told News 9 the tax bill for the 24-unit Cornerstone Court apartments surged by $33,000 after the complex’s assessed value tripled to $5.1 million. According to local reports, condo and mobile home representatives are worried about how the tax burden may impact residents —which include older adults on fixed-income.

What few can seem to understand is why condos and mobile-homes are taking more of a financial blow. Although the assessed value has increased, the tax in Rochester dropped by $10.89, from $25.74 to $14.85 for each $1,000 of assessed value.

Here’s why residents can expect a larger property tax bill this year, and what they can do about it.

Tax burden shifts to mobile homeowners and condos

According to city officials, there are currently 2,650 mobile homes in Rochester, either on privately owned land or in one of 24 mobile home parks. Overall, the city has about 33,500 residents.

Rochester is located in southeastern New Hampshire, right along the Lakes Region, making it a prime location for seasonal campers as well.

Out of all sectors, mobile home residents were dealt the biggest financial blow from the city’s latest reassessment in home values. Rochester Mayor Paul Callaghan acknowledged mobile homeowners have seen their fair market values “double, and sometimes triple.”

As for reasoning: Callaghan indicated that city-wide property revaluations haven’t been done in five years. The new figures reflect significant shifts in the housing market since the pandemic.

What do taxes look like in Rochester?

The net 2024 revaluation in Rochester is $5.1 billion, that’s up $2.3 billion from the previous year.

Though assessed values were much higher, taxes were $14.85 for each $1,000 of assessed value. According to the Rochester Post, which is linked to the mayor’s office, that represents a 42.3% reduction from the rate of $25.74 two years ago.

Still, why the property tax burden appears to have shifted from single-family homes to condos and mobile properties remains to be determined.

What residents find even more insulting is that despite now facing higher property taxes, mobile home parks and condominiums are not included in the city’s contract with Waste Management.

That means that daily maintenance, trash pick up, or snow plows are also paid by residents via maintenance fees, which can tack on thousands of dollars annually.

Rochester residents can take action now

Rochester locals plan to discuss property tax hike concerns at the next City Council meeting on January 21. However, city officials have pointed to online resources for residents that may want to contest their new tax bill.

According to the Assessor’s Office, you can visit Rochestor’s city website to view the following details regarding your revaluation.

• Information on exemptions and credits for disabled, Veterans, and certain age groups
• A link to GIS online, for property owners to view records

The timeline to contest your 2024 assessment is also limited. You can file for an abatement until March 1. Make sure to gather evidence on recent comparable sales or property conditions to make the case for a lower assessed value.

How else can you lower your property tax bill?

If you’ve exhausted all options and exemptions, another step you can take to reduce your tax bill is to limit major home improvements that may increase the value of your home. Also, remember there are tax breaks available for homeowners and homebuyers that you can take advantage of.

Related Content

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Millions of survivors of natural disasters will get much-needed tax breaks on compensation, but it’s only a drop in the bucket.

The Federal Disaster Tax Relief Act brings tax relief to victims of certain federally declared natural disasters and wildfires. Recently signed into law by President Biden, the new law allows those victims to claim qualified disaster-related losses without having to itemize deductions and eliminates the 10% adjusted gross income limit for claimants.

Additionally, the legislation makes compensation from settlements for disaster victims tax-free. The new tax relief package will help victims of recent hurricanes Helene and Milton and severe storms that have devastated areas of Alaska, Connecticut, Louisiana, Virginia, Pennsylvania, and Illinois.

Californians impacted by wildfires, survivors of the East Palestine, Ohio train derailment, and anyone impacted by disasters declared up to 60 days after the law’s enactment, will also get tax relief.

The development follows calls from various government agencies and congressional leaders highlighting the need to replenish key disaster response programs, as noted in a White House memo.

While tax breaks should help victims receive slightly more compensation, FEMA and the Small Business Administration (SBA) have expressed that their funding to support disaster victims is running low or already exhausted.

Separately, Congress is aiming to secure around $100 billion in funding via a year-end stopgap deal targeting natural disasters.

Here’s what survivors of federally declared disasters can expect under the new tax relief law.

Federal bill targets tax relief for natural disaster victims

President Biden signed the Federal Disaster Relief Act of 2023 into law on Dec. 12. of this year. What can you expect?

• The Act extends certain provisions of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and introduces several tax breaks targeting recent disasters.
• Families and individuals who experienced losses due to disasters such as hurricanes Helene and Milton, the California wildfires, the East Palestine, Ohio train derailment, and other recent federally declared disaster areas across the country, will receive crucial tax breaks on compensation.

Specifically, the measure would provide relief for individuals and businesses impacted by a presidentially declared disaster dating back to Dec. 2020. California wildfire victims will also be eligible for tax relief under the new law. Qualified wildfire relief payments date back a decade.

What is a qualified disaster area?

For this new law, a qualified disaster area is a location where a major disaster has been declared by the President during the period beginning January 1, 2020, and ending 60 days after the date of the law’s enactment.

Keep in mind, as mentioned, there’s an exception for wildfires that devastated California. (Federally declared wildfires date back to December 31, 2014.)

What kind of tax relief will natural disaster victims get?

Imagine losing your home and all of your belongings to a natural disaster and waiting to get compensated. Only to have the amount slashed by federal taxes.

Until now, personal casualty and theft losses related to a federally declared disaster were subject to a $100 per casualty and 10% of your adjusted gross income (AGI) reduction. Taxpayers also had to itemize deductions to claim any losses as a result of a qualified disaster.

Now, this new law simplifies the process for claiming losses. Briefly, survivors of qualified federally declared disasters:

• No longer have to itemize deductions to claim losses
• Compensation won’t be subject to a 10% adjusted gross income reduction threshold
• Taxpayers from qualified wildfire disasters can claim a credit or refund related to relief payments received on or after December 31, 2019 (or previously included in gross income)
• Survivors or victims of the East Palestine, Ohio train derailment may exclude related compensation payments from gross income

California wildfire victims get tax relief

The newly enacted Federal Disaster Tax Relief Act also delivers relief to thousands of Californians who were victims of wildfires over the past decade.

A qualified wildfire disaster is any federally declared disaster after December 31, 2014, due to a forest or range fire.

Where will wildfire victims see tax relief?

• Payments made to compensate wildfire victims for their loss are exempt from federal income tax, including attorney and settlement fees
• Shields payment receipts from losing benefits, such as Covered California premium subsidies, VA co-pay assistance, and FAFSA
• This applies to any wildfire payments received from 2020 to 2025 for federal wildfire disasters that occurred after 2014

According to government calculations, an estimated $512 million in taxes will be returned to wildfire victims and survivors.

Qualified wildfire relief payments are amounts received by or on behalf of an individual as compensation for expenses or losses incurred due to the incident. Payments don’t include reimbursement by an insurance company or related party.

The California wildfires tax relief provision was included in the bill after California state Reps. Mike Thompson (D-St. Helena) and Doug LaMalfa (R-Richvale) pushed forward legislation asking for crucial relief to thousands of victims in their communities.

Over the past decade, multiple wildfires have devastated several communities across California. This led to entire communities being destroyed, fatalities, and survivors left to pick up the pieces.

“While no fire victim can ever be made truly whole, this law will provide needed and deserved relief to thousands in our community and across our country,” Thompson said.

East Palestine Village communities will also benefit

If you were a resident of Ohio and Pennsylvania and are recovering from the East Palestine train derailment, you’ll also get some tax relief.

According to the legislation, amounts received by or on behalf of an individual as compensation for loss, damages, and expenses as a result of the train derailment are equal to qualified disaster payments that will be tax-free and not subject to your adjusted gross income level.

The East Palestine relief payments must be due to the train derailment of February 3, 2023.

These also include compensation for expenses incurred for:

• Loss in real property value
• Closing costs in respect to real property (including realtor commissions), or,
• Inconvenience (including access to real property)

There’s one caveat: said amounts in compensation must have been provided by the following:

1. A federal, state, or local government agency
2. Norfolk Southern Railway
3. Any subsidiary, insurer, or agent of Norfolk Souther Railway or any related person

Bottom line: Federal funding for disaster programs

The last time a comprehensive natural disaster tax relief package was passed by Congress was two years ago, and the Federal Disaster Tax Relief Act brings much-needed relief one step further.

Families and individuals impacted by federally declared natural disasters, including wildfires will have an easier experience when claiming losses. Additionally, compensation received as a result of the qualifying disaster will no longer be subject to taxes or income-based reductions.

Congress aims to secure over $100 billion in funding for natural disasters in a year-end deal

Separately, Congressional leaders have reportedly reached a deal on stopgap legislation that could deliver more than $100 billion in emergency aid for disaster relief through March 2025 as part of their year-end package.

Details are expected soon, but, for now, the Federal Disaster Relief Act offers eligible taxpayers some relief.

Related Content

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Open enrollment to purchase health insurance for 2025 is here, and this year, as many as 100,000 people are newly eligible to apply.

As of November, some individuals with Deferred Action for Childhood Arrivals (DACA) and certain other lawfully present immigration statuses can purchase private health insurance through the federal marketplace, the online network of health insurance plans available via the Affordable Care Act (ACA), or “Obamacare.”

The newly qualifying families and individuals will also be eligible for two subsidies to pay for health insurance purchased from the federal marketplace, as long as they meet income and tax requirements.

The expanded eligibility comes as key provisions of the ACA, including subsidies like the premium tax credit are set to expire by the end of 2025 unless Congress acts.

It's also important to note that a new court ruling means DACA recipients in 19 states won't be eligible to enroll in ACA insurance. (More on that below).

In the meantime, here’s what you need to know about who can apply for ACA healthcare during the 2025 open enrollment season.

Coverage now extends to some 'lawfully present' immigrants

As of November 1, 2024, some DACA recipients and lawfully present immigrants can now apply for private health insurance plans under the Affordable Care Act’s marketplace, like HealthCare.gov.

According to the federal marketplace, the term “lawfully present” includes, but is not limited to individuals who:

• Have a valid non-immigrant VISA or are of qualified non-citizen immigration status
• Hold a humanitarian status or other protected status
• Have a legal status, such as temporary resident status, LIFE Act, or Family Unity individuals

However, it's important to note that millions of Dreamers across 19 states have just been barred from getting health insurance.

As Kiplinger has reported, a North Dakota federal judge’s ruling prevents Deferred Action for Childhood Arrivals (DACA) immigrants in Kansas, along with 18 other states including Florida, from purchasing health insurance from the federal marketplace.

The temporary order could impact over 162,000 Dreamers in those states and as many as 87,620 in Texas alone.

For more information on the injunction and to learn which states now bar DACA ACA access, see our report: 19 States Cut Off Dreamers From ACA Insurance.

You may also be eligible for subsidized coverage

Depending on your income and tax filing status, (and if you live in a state where DACA ACA access is still legal), you can also be eligible for two types of subsidies available through the Marketplace:

1. The Premium Tax Credit
2. Cost Sharing Reductions

As reported by Kiplinger, the premium tax credit helps qualifying individuals and families afford healthcare plans from the federal marketplace. As a refundable credit, you can get some or all of the credit as a tax refund. That means, if the credit lowers your tax bill to zero, the IRS can apply the remaining portion of the credit to your tax refund.

If you are eligible for the premium tax credit, you’ll have several options for using your credit as you are enrolling:

• Receive it as a tax credit when you file your return
• Choose an advance premium tax credit and use the credit to pay your insurer in exchange for a lower monthly premium
• Split it, and use some of the credit as an advance to lower your insurance premium and the remaining amount as a tax refund

What about cost-sharing reductions?

Once you fill out your application on the Marketplace, you’ll also be told if you’re eligible for an additional discount known as cost-sharing reductions (CSRs).

If you qualify for cost-sharing reductions, you must pick a plan in the Silver level to receive extra savings on out-of-pocket costs related to your healthcare, such as co-pays, deductibles, coinsurance, and out-of-pocket maximums.

Those who are eligible for cost-sharing reductions are required to:

• Be eligible for the premium tax credit
• Have an income between 100% and 250% of the federal poverty level

Does your state have other health programs?

Your state of residence can also impact the affordability of your health insurance. The Affordable Care Act allows states to create a Basic Health Program (BHP), which provides health insurance for low-income residents also eligible to apply for coverage under the federal marketplace.

To be eligible, you must have an income between 133% and 200% of the federal poverty level.

States that have implemented the Basic Health Program include:

• Minnesota
• Oregon

(Note: New York suspended its BHP on April 1, 2024.)

Were you looking for Medicaid or CHIP but didn’t qualify?

If you’re not eligible for federally-funded Medicaid, you may be eligible for state-funded Medicaid or similar programs.

When to enroll for Affordable Care Act coverage

Newly eligible DACA recipients and individuals will have a 60-day special enrollment period from November 1, 2024, through January 15, 2025.

• Generally, people who apply during open enrollment have to wait until January 1 to use their health insurance.
• However, the newly eligible DACA enrollees can start using their health insurance as soon as December 1, if they sign up for Marketplace coverage by November 30, 2024.
• Likewise, if you enroll for coverage on or before January 15, you can start using your coverage on February 1, 2025.

You can enroll online at HealthCare.gov, your state’s Health Insurance Marketplace, or by calling the Marketplace call center at 1-800-318-2596. However, certain dates for enrollment may change if you seek coverage through a state-based Marketplace.

Bottom line: Why does the 2025 open enrollment matter

Under previous Centers for Medicare & Medicaid (CMS) rules, DACA recipients were excluded from the definition of lawfully present immigrants. In May 2024, a new rule expanded eligibility terms to allow DACA recipients to enroll in private healthcare insurance through the Affordable Care Act’s marketplace and enroll in the Basic Health Program. Although a federal judge has blocked access in 19 states, DACA recipients in other states so far remain eligible.

According to the U.S. Department of Health & Human Services, more than one-third of DACA recipients don’t have health insurance. Now that CMS expanded its eligibility requirements over 100,000 uninsured DACA recipients could enroll during this year’s open enrollment period.

As mentioned, newly eligible individuals will also have access to federal and state subsidies that can make their access to health insurance more affordable.

Could some subsidies be at risk?

Some provisions under the Affordable Care Act are set to expire by the end of 2025 unless Congress acts, meaning millions of people are at risk of losing access to affordable healthcare.

It remains to be seen how the newly elected Congress will address the future of the ACA next year, and if the program will retain crucial help like the premium tax credit.

Also, the DACA ACA program is still subject to litigation, so it's hard to say how long recipients will have healthcare access through the marketplace.

Related Content

• New 2025 Child Tax Credit Announced: How Much Is It?
• Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?
• States That Offer a Child Tax Credit in 2024

There’s no denying it: Florida homeowners are fed up with property taxes.

Tax bills have gotten so high that more than 66% of Floridian voters passed a ballot measure last November that increases their property tax break. Amendment 5, ties the state’s homestead exemption to the annual national inflation rate.

Currently, Florida homeowners can get a property tax break of up to $50,000 of their home’s assessed value. By tying the homestead exemption to the nation’s Consumer Price Index (CPI), if inflation goes up annually — so does your exemption.

That’s something homeowners can look forward to as some county residents receive their property tax record card.

Gov. Ron DeSantis said property taxes in Florida would be better if they were gone in a bid for the 2026 state election. Eliminating property taxes in the state would require a constitutional amendment and at least 60% voter approval, but so far it seems like a far-fetched goal.

The proposal comes as Floridians have seen property taxes spike nearly 60% within five years. Pandemic boomtowns such as Jacksonville, Tampa, and Miami registered the largest increase, a report by real estate brokerage Redfin found.

Still, some analysts are concerned about how eliminating property taxes will impact the state’s ability to fund schools, public safety, and healthcare at the local level.

“Property taxes are local, not state,” DeSantis wrote on social media platform X. “Taxing land/property is the more oppressive and ineffective form of taxation.”

Here’s what you need to know about Florida’s current property tax breaks.

Related: Florida Residents Could Soon Get Property Tax Relief

Florida homestead exemption

Planning to relocate anytime time soon to the Sunshine State? Well, you’ve probably heard of Florida’s homestead exemption.

As of last year, as many as 4.3 million households are eligible for the homestead exemption each year.

• The tax break allows you to reduce the taxable value of your primary residence by $25,000 plus an additional exemption of $25,000 for properties valued over $50,000.
• The first $25,000 of the exemption applies to all taxing authorities.
• The remaining portion excludes School Board taxes and applies to properties with assessed values greater than $50,000.
• The homestead exemption cannot increase more than 3% per year, or the consumer price index, whichever is lower.

For example, if the taxable value of your home is $400,000, you’ll get a $50,000 tax break on that total assessed value. Some realtors estimate it can save homeowners around $800 on their tax bill each year.

What changes with Amendment 5?

With Amendment 5, your homestead exemption moves in tandem with the Consumer Price Index or annual national inflation rate starting in January. If inflation climbs, say 2%, your tax break will increase by a similar amount. At the same time should the inflation rate weaken, your exemption won’t change.

• The amendment is effective as of January 1, 2025, and begins with 2025 tax year assessments.
• The value of new and existing homestead exemptions for 2025 is equal to an exemption amount of $50,722 for tax year 2025, according to Tomas Regalado, property appraiser of Miami-Dade County.
• Each subsequent year, the homestead exemption amount will be recalculated based on the CPI.

Some of those against Amendment 5, characterized the tax break as “regressive.”

The Florida Policy Institute estimates that once implemented, households would see an average savings of just $20 over the first five years of its enactment. The measure would also exclude renters and small businesses.

Their biggest concern is the potential impact on the state’s local government funding, as property taxes represent a large portion of revenue. By their calculations, local governments would lose roughly $406 million within the first five years.

By the fifth year, the inflation adjustment would cost localities as much as $140 million annually. Some of the most affected local governments include:

• Miami-Dade
• Broward
• Palm Beach

Why are Florida property taxes so high?

Florida property taxes surged nearly 60% in five years and it’s not just climbing home prices to blame.

Florida homeowners have seen their property tax bills balloon close to 60% within five years in Tampa and Jacksonville alone. According to Redfin, the dramatic increase is due to the influx of residents during the pandemic homebuying boom, and partly a result of the increasing intensity of natural disasters.

However, property taxes in the Sunshine State had been climbing long before the pandemic came to shake real estate up. Florida is home to three of the five major U.S. metros where property tax bills have increased the most since before 2020.

In Jacksonville, the typical homeowner pays nearly 60% more in property taxes today than they would have before the pandemic, bringing the total tax bill up $228 to $2,735. This was followed by two Florida metros:

• Tampa’s bills jumped over 56%, equal to $250 or $2,797
• Miami’s property taxes grew 48%, rising by $387 to a total of $4,401

By comparison, property taxes nationwide increased by an average of 30% over the same period to a monthly median of $250.

What’s next for Florida’s property tax

Property taxes will still be a sore point for Floridians for the time being.

The influx of new buyers during the pandemic’s housing boom in the Sunshine State pushed home prices up substantially. While prices have fallen from their peak, assessed home values are still up — causing property taxes to remain elevated.

Since Florida is one of the few no-income tax states, local governments have to find funding for projects somewhere. Two other factors those interested in moving to Florida should keep in mind:

• Rising population levels have driven local governments to seek more funding for schools, roads, and public services. Raising taxes like your property tax is one way to do it.
• Natural disasters like hurricanes, tornadoes, and floods are another reason why property tax bills may seem higher. According to Redfin, Florida governments use some of the funds to invest in climate-resiliency projects.

While the homestead exemption may increase your tax break with time, there are other ways you can lower your property tax bill. For example, relocating to a county with lower property tax rates, limiting your home improvements, or seeking other government assistance programs.

Stay tuned to our coverage of Florida’s property tax breaks, as the state’s 2025 budget plan didn't include Gov. DeSantis’ favored property tax cuts.

Related Content

• How to Reduce Your Property Tax
• Will Florida Property Taxes Be Eliminated?
• Property Tax 101: What Homeowners Need to Know
• Property Tax Cap: Does Your State Have One?

Running late? Traffic in the ‘City That Never Sleeps’ may get better this year.

New York City’s MTA board cemented Gov. Kathy Hochul’s initiative to implement the nation’s first congestion pricing, imposing fees on drivers entering lower Manhattan.

As of January 5, commuters will pay a new toll of $9 to enter Manhattan’s Central Business District south of 60th Street. The plan is designed to provide $15 billion in funding for the city’s transit system and alleviate congestion.

The MTA will phase the toll structure over six years, gradually increasing to $12 in 2028 and $15 by 2031. Overall, the new plan features a 40% reduction in all tolls for vehicles entering downtown Manhattan. It’s expected to save commuters up to $1,500 a year.

The controversial toll has also been the subject of multiple lawsuits, including one from New Jersey, which alleges the fees are illegal and an “unfair burden” on commuters. (More on that below.)

Here’s what you need to know about the nation’s first congestion toll.

Are congestion tolls a tax?

At its root, congestion pricing is designed like a “sin tax” for driving in overcrowded areas, according to the Tax Policy Center.

That’s because congestion tolls impose a slightly higher fee than a regular highway or cross-bridge toll on drivers entering a certain area to reduce traffic and air pollution, as well as the negative implications of highly commuted areas.

Note: “Sin taxes,” such as a cigarette tax, are excise taxes levied to discourage behaviors that negatively impact society, the environment, or your health. The funds are then earmarked for related costs.

For instance, New York’s congestion toll aims to reduce the gridlock in downtown Manhattan and alleviate air pollution. Funds gathered through the toll will be directed to:

• Expanding bus service to outer borough residents and plans to build an Interborough express – slashing 30 minutes of commuting time between Brooklyn and Queens
• Extending Second Avenue Subway
• Investing in the Long Island Rail Road (LIRR)
• Improving elevator service for seniors and people with disabilities

How much will commuters pay?

The amount you’ll end up paying at the toll will depend on the type of vehicle you’re driving, the time of day, and if you have an E-ZPass – the city’s electronic toll collection system stamp.

You’ll be charged more if you commute during MTA’s peak hours (5 a.m. to 9 p.m. on weekdays and 9 a.m. to 9 p.m. on weekends). Overnight toll rates will be 75% cheaper compared to driving into the Congestion Relief Zone during the peak period.

Small passenger and commercial vehicles with E-ZPass will pay:

• $9 during MTA’s peak period and $2.25 during the overnight period
• Motorcyclists will pay a $4.50 toll during peak hours and $1.05 during the overnight period
• These vehicles will be charged only once per day.

Passenger vehicles without E-ZPass will be required to pay $13.50 during peak period, and $3.50 overnight. Likewise, motorcyclists will be charged $6.75 during peak hours and $1.65 overnight.

The size of your vehicle will also cost you.

• Large (multi-unit trucks) and tour buses will be charged a peak toll of $21.60, and $5.40 during the overnight period
• Small (single-unit) trucks and some buses will pay $14.40 during peak hours and $3.60 during the overnight period

Catching an Uber or a green cab? Instead of paying a daily toll, for-hire vehicles licensed with the NYC Taxi & Limousine Commission will be eligible for a smaller per-trip charge paid by the passenger. The charge will apply for each trip “to, from, or within” the congestion relief zone.

• Taxis, green cabs, and black cars will charge a 75-cent fee per trip
• App-based services like Uber or Lyft will pay a $1.50 fee per trip for both the peak and overnight period

Discounts and exemptions

Emergency vehicles, school buses, and specialized government vehicles are exempt from the toll charges related to New York’s congestion pricing, but there are some programs you can apply to today.

• A 50% discount is available for low-income drivers enrolled in the Low-Income Discount Plan. The discount kicks in after the first 10 trips of the month and applies to peak periods after that. You must have an adjusted gross income at or below $50,000 to qualify.
• A vehicle registered to a person or designated caregiver of someone with an Individual Disability Exemption Plan (IDEP) may be exempt.
• Organizations that operate vehicles that transport people with disabilities may be exempt if they apply for the Organizational Disability Exemption Plan (ODEP).

Additionally, New York residents with incomes under $60,000 may qualify for a low-income tax credit for the amounts of tolls paid. More information will be provided in the upcoming months.

Will Manhattan’s new toll program last?

It remains to be seen whether Manhattan’s congestion pricing will stick as its popularity has failed to resonate with many residents of the Tri-State area.

New Jersey Gov. Phil Murphy (D) filed a lawsuit alleging the tolls unfairly impact New Jersey commuters. The governor said “it could not be a worse time” to implement a $9 toll on individuals traveling to downtown Manhattan for work, leisure, or school given the economic climate.

Hochul’s congestion pricing framework is also the focus of multiple lawsuits fighting the program, including those brought by the Trucking Association of New York and the United Federation of Teachers, the city’s largest teacher’s union.

“No one disputes that New York needs to invest in public transit. But doing it on the backs of the working people of New York City is wrong, and tone deaf,” UFT President Michael Mulgrew said in a statement

New York House Republicans are also urging President-elect Donald Trump to kill Hochul’s congestion plan once he takes office in January, according to Congressman Mike Lawler.

Note: As of January 2, a federal judge has largely cleared the way for the New York City congestion pricing plan despite the New Jersey lawsuit. The recent ruling requires additional environmental review but doesn't prevent the implementation of the toll for vehicles entering Manhattan below 60th Street.

New Jersey officials continue to contest the plan, arguing potential economic and traffic impacts, but the court's decision suggests the tolling program will proceed as planned. As of January 5, the new congestion tax was implemented in NYC.

Stay tuned for any new developments that may impact your commute.

Related Content

• 10 States With The Lowest Gas Tax
• Landmark Lawsuit Targets Unfair NYC Property Taxes
• New York Sending School Tax Relief (STAR) Checks

Whether you’ve experienced property loss or business disruptions, having your federal and state tax records can facilitate the claims process as you try to rebuild.

Your tax records essentially can serve as proof of income, property ownership, and expenses that may be subject to federal disaster-related tax deductions or government relief.

When a disaster strikes, it’s best to act fast to act fast so you can get reimbursements sooner rather than later. Here’s how to get your tax documents back, according to the IRS.

How to recover your federal tax records

If you lost your tax documents due to a natural disaster, the IRS may allow you to recover your federal return transcripts for free. There are several ways you can request your documents, including online, by phone, or by mail.

Some tax records you’ll want to gather may include your W-2s, 1099s, or prior tax returns.

If you’re a business owner, you’ll also want to ask for copies of the current and previous year's sales tax reports, and payroll tax returns. These documents will reflect gross sales for a given period.

• To get your tax records online, visit the Get Transcript tool on IRS.gov.
• Transcripts requested by phone can be done by calling IRS customer service at 800-908-9946.
• Mailed transcripts from previous years, can be delivered by filing a Form 4506-T, Request for Transcript of a Tax Return.
• The same applies for past returns, you must file a Form 4506, Request for Copy of a Tax Return.

You must mail your Form 4506 to the address shown in the form. Additionally, there’s a $43 fee charged for each tax return period requested. Copies are generally available for the current tax year as well as the previous six years.

How to get your transcripts or return copies mailed for free

The IRS does waive the normal $43 user fee under certain circumstances. However, you must write the appropriate disaster designation, such as “Hurricane Helene,” in red letters across the top of Forms 4506-T and 4506.

According to the IRS, mailed documents may arrive in 5 to 10 calendar days at the address they have on file for you.

Access IRS records and transcripts online

If you want to speed up the process of recovering your documents, you can view your tax records in your Individual Online Account.

The online account will allow you to view, print, or download your transcripts. It will also give you timely updates on:

• Digital copies of certain IRS notices, such as tax deadline extensions to file for victims of a natural disaster.
• Information on any relevant audits on your tax returns.
• Data from your most recently filed tax return.

The online account also lets you access the status of your refund or relevant information regarding Economic Impact payments, if any are given.

Where to get a copy of a state tax return

As you compile your tax statements, you’ll also want a copy of your local state return. To request a copy of your state return, contact your state’s Department of Revenue.

In Florida, for example, you can request a copy of your local tax return from the Florida Department of Revenue by emailing RecordsRequests@floridarevenue.com.

To request a copy of a Florida state tax return by mail, fax, or email, you must file a Form DR-841, Request for Copy of Tax Return. The form will ask for some personal information, including which tax return copies you want delivered to you.

Meanwhile, in North Carolina, you can request a free copy of your state tax return by mailing a written request to the NC Department of Revenue. Make sure to include your name as it appeared on the return, your mailing address, social security number, and the tax year requested. The return should be delivered within 20 days.

Make sure to file these requests carefully and through the appropriate channels to avoid fraud or identity theft.

What is a casualty loss deduction?

Once you have your tax records, taxpayers in federally declared disaster areas can generally claim a casualty loss deduction on their federal income tax return. The IRS defines a casualty loss as deductible losses that occur from the destruction of personal property following a natural disaster, fire, or car accident.

Note: Due to the Tax Cuts and Jobs Act (TCJA) from 2108 to 2025, personal casualty losses are only deductible if the loss was caused by a federally declared disaster. Such losses are generally related to your home, household items, and vehicles.

According to the Taxpayer Advocate Service, you may also be able to deduct certain personal property losses that aren’t included in your insurance.

You can claim these losses by filing the following documents:

• File a Schedule A, Form 1040, or an amended return using Form 1040-X.
• You’ll also have to include Form 4684 to report your losses from the disaster.
• Casualty losses are deductible the year the loss occurred.
• However, if your casualty loss is due to a federally declared disaster, you can opt to deduct the loss on the return for the tax year preceding the year in which the disaster happened.

Have your tax records ready

Your tax documents can help you quickly claim your disaster-related benefits. That’s why the sooner you act, the better.

Remember, as Kiplinger has reported, the IRS has implemented tax deadline extensions in states impacted by federally declared disasters. Additionally, FEMA is offering government assistance to those impacted by recent natural disasters.

When in doubt about how to proceed, you can always speak with a certified tax professional or visit the IRS Disaster Relief website for more information.

Related Content

• The Truth About Hurricane Relief, FEMA, and Your Taxes
• How Long Should You Keep Tax Records?
• States With IRS Tax Deadline Extensions
• Five Ways Your Boss Can Step Up in the Aftermath of a Hurricane

Property taxes are probably one of the least exciting responsibilities to look forward to after purchasing a home.

The amount of property tax you pay will depend on the value of your home, its location and if you’re lucky — the tax breaks your state or city levies on the bill. Some households can expect to pay just hundreds of dollars, while others may be forced to pay thousands each year.

According to ATTOM Data Solutions, the average property tax bill increased 4% nationwide to $4,062 last year. If you’d like to find out if you live in one of the cities with the lowest property tax rates, read on.

How we found the lowest-ranking property tax cities

The rankings for the cities with the lowest property tax were provided by ATTOM Data Solutions, which surveyed property tax rate data from 84.9 million U.S. single-family homes in the United States.

Note: The effective property tax rates, home values, and corresponding tax bills reflect the most recent figures from 2023. As a result, some of the data points may vary from what you're currently seeing in these or other areas.

Some 225 popular metropolitan areas were evaluated, and here are the five cities with the lowest property tax rates in the country.

1. Daphne-Fairhope, Alabama

Effective property tax rate: 0.27%

Average property tax bill: $1,293

Located in Baldwin County, and the eastern coast of Mobile Bay, the city of Daphne-Fairhope ranks as the metropolitan area with the lowest property tax rate out of the 225 most popular cities ranked by ATTOM. Alabama homeowners with a typical home worth $478,109 can expect a property tax bill of $1,293.

Overall, Alabama is also ranked as one of the 10 states with the lowest property taxes in the country. Residents carry an effective property tax rate of 0.42%. At the median home value of $265,811, the average tax paid per year is $1,101.

Alabama also offers a Regular Homestead Exemption for property owners under age 65, and who are not disabled. Qualifying residents can deduct up to $4,000 in state tax and $2,000 in county tax from the assessed value of their home.

The state also has homestead exemptions for folks over 65, blind, or permanently disabled.

2. Salisbury, Maryland

Effective property tax rate: 0.30%

Average property tax bill: $1,591

Salisbury is the biggest metropolitan area in Maryland and has the second lowest property taxes of the cities ranked on ATTOMS's list. According to 2023 data, for homeowners with a median property worth $524,086, the average property tax bill is $1,591.

The state of Maryland also offers a credit for property tax bills available to homeowners of all ages based on their household income. To qualify for the credit, you must meet the following requirements:

• Your combined household income must not exceed $60,000.
• Your net worth, including the value of the property for which the credit application is made and the cash value of IRAs or qualified retirement plans must not surpass $200,000.
• The applicant must be the legal owner of the property.

3. Honolulu, Hawaii

Effective property tax rate: 0.31%

Average property tax bill: $3,939

Honolulu ranks as the city with the third lowest property tax rate in the United States, however, real estate isn’t as affordable. The average estimated home value was $1.2 million last year, according to ATTOM. That means homeowners in Hawaii paid an average property tax bill of $3,939, nearly $4,000.

Luckily, there are some new property tax breaks rolling out tax year 2024 for Honolulu homeowners:

• Resident homeowners under age 65 will be eligible for a $120,000 home exemption.
• For those 65 and older, the home exemption amount climbs to $160,000. To qualify for the 2024 exemption, you must be 65 or older before June 30 of the preceding tax year.

4. Knoxville, Tennessee

Effective property tax rate: 0.32%

Average property tax bill: $1,349

Knoxville, which is home to just under 900,000 residents in the eastern region of Tennessee has one of the lowest property tax rates in the country, according to ATTOM. The average home is valued at $426,216, and with a property tax rate of 0.32%, most homeowners can expect an average bill of $1,349.

Knox County also offers up to $89 in property relief for older adults aged 65 and above or disabled homeowners. But your total household income cannot exceed $36,370.

Other ways to further lower your property tax bill include:

• Property tax relief for disabled veterans and widowers, up to $487 (at no income limit)
  
• Property tax freeze for seniors. The State of Tennessee passed legislation allowing counties to ‘freeze’ property tax amounts for homeowners who are 65 or older on or before December 31, 2024, with a combined household income under $60,000. Homes and up to 5 acres can qualify for the tax break.

5. Tuscaloosa, Alabama

Effective property tax rate: 0.32%

Average property tax bill: $860

Alabama is one of the states with the lowest property tax rates, but its western city of Tuscaloosa is even more affordable. The average estimated home price is $266,044, and homeowners there could expect a property tax bill of $860.

As mentioned earlier, the state has a Regular Homestead Exemption for property owners under the age of 65 and exemptions for persons with disabilities.

Related Content

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• States With the Lowest Property Tax

The Tax Cuts and Jobs Act (TCJA) became effective more than seven years ago as a major Trump administration tax code overhaul.

Before the recently so-called "One Big Beautiful Bill" (OBBB), the TCJA was the biggest change to tax law and policy in recent decades. (That's why the TCJA is also known as the "Trump tax cuts.")

Extending the expiring TCJA provisions in the OBBB affects millions of taxpayers across the U.S. since its provisions cover everything from changes to the standard deduction and the child tax credit to income tax rates and even the availability and amounts of other popular tax credits and deductions.

While many key TCJA provisions were extended in the OBBB, some were not. For instance, certain individual Alternative Minimum Tax (AMT) phaseout limits reverted to 2018 levels.

We’ll cover what the TCJA is, several provisions that remain, and how it all might impact your household.

TCJA Explained

What is the TCJA?

The TCJA was a sweeping tax overhaul that reduced tax rates, changed processes, and restructured individual and corporate tax frameworks.

As mentioned, the law, enacted in 2017, is also known as the "Trump tax cuts" because it was a signature piece of legislation in Trump's first term as president.

Several significant tax changes are in the TCJA, but a major one was a temporary reduction in individual federal income tax rates.

Tax Rates

TCJA income tax changes

Almost every U.S. taxpayer was affected in some way by the TCJA. Below are a few highlights from the tax rates and the bracket changes tied to them. We’ll use the data to illustrate examples of the 2017 law’s impact.

Source: Tax Policy Center. The tax bracket income thresholds here compare 2018 prior and post-TCJA amounts to show the immediate impact of the TCJA on tax brackets.

Federal income tax brackets are adjusted annually for inflation, so these comparisons don't reflect current federal income tax brackets for the 2025 tax year.

As shown above, a single filer with income above $38,700 before the TCJA was enacted would have been subject to a 25% federal tax rate. The year following the TCJA's enactment, that same income level was instead subject to a 22% tax.

Another example from above is a married, filing jointly couple with income above $480,050 before the TCJA was enacted would have been subject to a 39.6% marginal federal tax rate. The year after the TCJA was signed into law, those earnings were instead subject to a 35% tax.

Note: Remember that the above examples merely illustrate the immediate impact of the change in tax rates from 2017 to 2018. Since federal tax brackets are adjusted yearly for inflation, the income tax brackets for 2025 are not reflected in that chart. For more information, see 2025 Federal Tax Brackets and Income Tax Rates.

Most tax rates were reduced under TCJA. However, the lowest tax rate of 10% was not. Taxpayers in the lowest bracket before and after the TCJA could have been subject to a 10% tax.

Households earning $450,000 or more received about 45% of benefits from the TCJA. As you can see from the above examples, under the TCJA, those with higher incomes generally saved more on taxes than taxpayers with lower incomes.

Note: In the newly enacted OBBB, the post-TCJA federal income tax bracket schedule and lower rates were made permanent.

Child Tax Credit

TCJA child credit changes

The TCJA also cut personal exemptions and expanded the federal child tax credit (CTC). That meant families could no longer take the personal and dependent exemption, which was $4,050 (indexed for inflation).

And under the newly signed OBBB law, the elimination of the personal and dependent exemption is permanent.

Before the TCJA, 292.7 million people claimed personal and dependent exemptions. Total taxpayer savings were in the billions, so individuals could potentially see a reduction in savings with permanent termination.

However, a higher CTC amount, which used to be $1,000, pre-TCJA, has become permanent under the OBBB.

• The new CTC amount under the OBBB is $2,200 per child.
• The tax law also indexes the credit amount for inflation yearly, starting in 2026.
• The qualifying child’s age for this credit remains at 17 and under (pre-TCJA allowed a credit for children 16 and under).

As Kiplinger previously reported, data show that poverty levels can decrease when families benefit from an expanded CTC. But it hasn’t ended there.

The OBBB also maintains the increased income phase-out thresholds, the nonrefundable, non-child dependent credit, and leaves the refundable part of the child tax credit at $1,700.

For more information, check out Kiplinger's report, Three Major Changes Coming to Parents Under the Trump Megabill.

Note: The TCJA also changed the child tax credit requirements regarding Social Security numbers (SSN). Before, a qualifying child didn’t have to have an SSN. After, children without eligible SSNs couldn’t qualify for the full credit. Under the OBBB, a child's and his or her parents' SSNs are required to claim the credit.

Related: Child Tax Credit Increase Under Trump.

Standard Deduction

TCJA doubled standard deduction

The TCJA almost doubled the baseline federal standard deduction.

When the TCJA was enacted, the standard deduction jumped from $6,500 to $12,000 (single filer). For married, filing jointly filers, the standard deduction increased from $13,000 to $24,000. The standard deduction is indexed annually for inflation.

Some bipartisan organizations suggest that the larger standard deduction offered by the TCJA leads to a progressive tax rate (a rate that increases as taxable income increases). This would mainly benefit middle-class and low-income households.

According to the Center for Economic and Policy Research (CEPR), studies have shown that more people with $200,000 or less in income took the standard deduction when the TCJA was first enacted. However, it should also be noted that data show most people took the standard deduction before the TCJA.

Under the recently signed OBBB, the raised standard deduction amounts are made permanent and further increased with an extra year of inflation adjustment.

For tax years 2025, the bill increases the standard deduction by the following amounts:

• Single filers get an extra $750
• Married, filing jointly couples receive an extra $1,500
• Head-of-household filers get an additional $1,125

For information about the current standard deduction, see How Does the Standard Deduction Work?

SALT Cap

New SALT Cap Limit under TCJA and OBBB Changes

The TCJA also limited the amount of state and local tax (SALT) you could deduct. The SALT deduction includes property tax and other taxpayer liabilities already taken out for state and local services.

Pre-TCJA, the deduction was limitless; after the law was enacted, you could only deduct up to $10,000 of your state and local taxes. This mainly affected those with high-worth homes or state and local taxes in high-cost areas, such as New York, New Jersey, or California.

For example, homeowners could no longer itemize the full amount they pay in state, local, and property taxes if they pay more than $10,000. This meant those taxpayers saw fewer benefits.

However, the OBBB includes a provision temporarily raising the SALT cap to $40,000.

• The cap will increase by 1% annually from 2026 through 2029.
• Starting in 2030, the SALT cap will expire and revert to the $10,000 TCJA limit.
• Those with modified adjusted gross income (MAGI) above $500,000 or more are subject to a phaseout ($250,000 if married filing separately).

There was much debate before the OBBB's temporary raise on the SALT cap was made final.

Rep. Nick Lalota (R-N.Y.), an outspoken critic of the SALT cap, told Politico that the tax bill was "dead effectively on the floor" under the original $10,000 the GOP proposed. Other Republicans representing high-tax districts have argued that a later proposed limit of $30,000 was still too low.

This might hint at future negotiations down the road when the $40,000 SALT cap expires in 2030.

For more information, see Kiplinger's report: SALT Deduction 2025: Three Things to Know Now.

Did itemized deductions go away under the TCJA?

The TCJA affected other miscellaneous itemized deductions in the following ways:

• It limited deductible medical expenses and deductible home-equity loan interest. The medical expense limit was later made permanent. The OBBB also made the limit on home-equity loan interest permanent, unless the loan is for buying, building, or substantially improving the home securing the loan.
• Increased the charitable contribution deduction rate from 50% to 60%. The OBBB made this provision permanent.
• Repealed a “Pease” limitation, which reduced itemized deductions based on taxable income above certain thresholds. The OBBB repeals the Pease limitation and replaces it with a new limit on itemized deductions, which applies mostly to taxpayers in the highest income tax bracket.

The TCJA also eliminated the deduction for unreimbursed employee expenses and tax prep fees, for alimony, hobby expenses, and moving expenses (unless you're military), and the deduction for casualty and theft losses, except for certain losses in federally declared disaster areas.

Those "miscellaneous itemized deductions" were permanently removed under the "One Big Beautiful Bill." However, the increased standard deduction in the OBBB might result in a larger tax refund for some taxpayers next year.

For more information, check out Kiplinger's report, Five Ways Trump's 2025 Tax Bill Could Boost (or Shrink) Your Tax Refund.

Alternative Minimum Tax

How the TCJA affected AMT (Alternative Minimum Tax)

The Alternative Minimum Tax (AMT) places a floor on the amount that higher-income taxpayers must pay, regardless of credits or deductions taken on their taxes.

The AMT’s income level and phase-out were raised under TCJA. This meant fewer higher-income people qualified for AMT (which for 2025 applies to taxpayers earning above $239,100). If a taxpayer did qualify, they generally paid less in taxes.

For example, the Tax Policy Center estimated that the number of taxpayers who would have paid AMT the year TCJA was enacted fell by about 5 million. This was big news for people who were subject to what some call a "parallel tax system," which provided the government with about $34 billion in revenue the year before TCJA.

Under the OBBB, certain AMT increased thresholds were made permanent.

For instance, the current exemption amounts have been extended, meaning AMT won't kick in until you meet the post-TCJA limits of $88,100 (single filers) or $137,000 (married, filing jointly, couples).

However, the higher phaseout limits have reverted to pre-TCJA levels. This effectively lowers the phaseouts to $1,000,000 for married filing joint filers and $500,000 for single filers. The rate at which the exemption is phased out has also been increased from 25% to 50% as income increases.

Estate Tax

Estate tax exemption extension

Another benefit for wealthier taxpayers under the TCJA is the doubling of the federal estate tax exemption.

In 2017, instead of paying taxes on estates above $5.6 million, higher-income individuals were not taxed until $11.2 million. The threshold is inflation-adjusted annually, with the current exemption level at $13.99 million.

The recently signed OBBB makes the higher exemption for the estate tax permanent. Not only that, but the law also indexes the estate exemption for inflation and raises the 2026 amounts to $15 million for single filers and $30 million for married couples.

For more information, see Kiplinger's report Big GOP Tax Bill Could Change Your Estate Planning for 2025.

Corporate Tax

Trump corporate tax rate

The TCJA changed taxes for businesses, too. For example, the TCJA cut the corporate income tax (CIT) from 35% to 21%. This was a permanent change.

Though the effect of lower corporate tax rates is debated in economic circles, the Tax Foundation reports that the burden of the CIT falls on consumers. Consequently, a lower CIT might entice companies to raise wages and lower prices for buyers.

Other TCJA changes made for businesses included:

• Created a 20% deduction on qualified business income for some business owners (pass-through entities). The OBBB made this deduction permanent.
• Limited deduction for meals and entertainment expenses (the latter are generally not deductible). The TCJA made this change permanent.
• Largely eliminated tax deductibility of net operating losses (NOL) for businesses. (The TCJA limited the NOL deduction to 80% of taxable income and eliminated most carrybacks.) This provision is permanent.
• Limited business interest expenses. (The OBBB makes a more restrictive calculation of adjusted taxable income (ATI) permanent.)
• Allowed 100% expensing on some business property for specific tax years. (This provision was set to phase out gradually after 2022.) The OBBB allows taxpayers to immediately expense 100% of qualified short-lived property that was placed in service on or after January 20, 2025.

That last point, on expensing business property, concerns depreciation. Normally, business assets are depreciated over their useful life (typically five, 10, or 15 years). Before the TCJA, tax law generally allowed some equipment to be partially expensed, but it was only 40% of qualifying assets.

The OBBB extends the TCJA provision allowing businesses to fully and immediately expense their qualifying short-lived assets placed in service after January 19 and before January 1, 2030. (Other types of property may be subject to a different duration of tax benefits.)

Accelerated depreciation creates a greater tax difference between reportable income (what the stockholders see) and taxable income (what the IRS sees). But this difference is temporary. In later years, when the asset has been fully expensed for tax purposes, but not for reportable income purposes, the business will pay more tax on that asset.

That is why accelerated depreciation might be called a "deferred tax liability." Businesses pay less in taxes now for greater tax liability in the future.

Effectively, immediate expensing allows companies to invest more in the short term. This could create more jobs, boost productivity, and raise wages.

TCJA vs. OBBB

Bottom line: Trump tax bill extends TCJA provisions

Many TCJA cuts became permanent. However, doing so came with a price tag.

The OBBB is estimated to cost about $4.5 trillion over ten years, according to Tax Notes. This significant federal deficit impact could impact your wallet through higher borrowing costs and potential future tax increases, or in other ways.

You might want to get a head start on your 2026 tax planning. Consult with a tax planner to look at your financial situation to see whether any recent tax changes apply to you.

Read More

• Three Popular Tax Breaks Are Gone for Good in 2026
• Trump's ‘One Big, Beautiful Bill’ With Trillions in Tax Cuts
• 2025 Standard Deduction Changes Under New Trump Tax Bill
• The GOP Wants to Auto-Enroll Your Child in a 'Trump Savings Account'

Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…

The lifetime estate and gift tax exemption for 2023 deaths is $12,920,000. After 2025, the exemption will fall back to $5 million, adjusted for inflation, unless Congress agrees to extend the higher amount. The odds of any extension depend on which party controls the White House and Congress after the 2024 election. 

Federal estate and gift tax exemption

Most tax-free gifts you make now won’t trigger post-2025 estate tax bills. Estates use the higher lifetime exemptions for gifts to calculate post-2025 estate taxes. So, many people who made or make big gifts from 2018 through 2025 won’t lose out on the benefit of the larger exemption amount if it drops back down in 2026. 

But not all gifts would qualify. Under an IRS proposed regulation, completed gifts that are later included in the decedent’s gross estate at death would be subject to the exclusion amount in effect in the year of the donor’s death. Implicated strategies include grantor-retained income trusts and transactions involving promissory notes.  

State estate and inheritance taxes 

The District of Columbia and 12 states levy their own estate taxes on some decedents: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. The estate tax exemption amounts in these 13 locales vary widely from state to state. Only Connecticut has hiked its exemption amount close to the current federal level. Six states now have inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Iowa’s inheritance tax is currently being phased out and is slated to end after 2024.

This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.

Related Content

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• Federal Tax Brackets and Income Tax Rates
• What's the Standard Deduction?

Time is running out if you haven't already filed your 2021 federal tax return. For most people, the tax return filing deadline is April 18 this year (residents of Maine and Massachusetts get one extra day). So, for all you tax procrastinators out there, it's time to get moving. One of the first things you should do is collect and organize your tax records. If you're going to file your own 1040, you should also check out tax software options. If you need more time to file your return, request a tax filing extension (although you'll still have to pay any tax you expect to owe). And, no matter when you fill out your 2021 tax return, you first want to familiarize yourself with the tax law changes that may impact it.

Many (but not all) of the new items on the 2021 1040 form come from the American Rescue Plan Act, which was enacted last March. This Covid-relief bill made changes to the child tax credit, child and dependent care credit, earned income tax credit, and more. Other changes stem from the expiration of earlier Covid-related provisions that expired at the end of 2020. There are a few modifications to some of the main 1040 schedules, too. And, of course, there are the normal inflation-based adjustments that occur every year.

There are many reasons why you should know and understanding these changes up front. First and foremost, it very well may result in a larger tax refund or a smaller tax bill. You're also likely to get through your return faster if you're already aware of any new twists and turns. If someone else prepares your 1040, it will be easier to catch any errors when you review the return. But since "Tax Day" is right around the corner, you don't have much time left to get up-to-speed on what's new and changed for your 2021 tax return. So take a look at our list below and study up now so you know what to look for before tackling your 1040.

"Tax Day" is the day that federal personal income tax returns are due. It was delayed the past two years because of COVID-19. In 2020, Tax Day was pushed back to July 15, and last year it was moved to May 17. This year, however, the tax return filing deadline is moved back to its normal spot on the calendar…well, sort of.

Federal income tax returns are normally due on April 15. But this year most 2021 tax returns aren't due until April 18. That's because of a holiday in the District of Columbia. If you live in Maine or Massachusetts, your federal return isn't due until April 19, thanks to a local holiday in those states. Victims of certain recent natural disaster can wait even longer to file their return.

There are some subtle, but important, changes to the 1040 form itself for 2021 tax returns. Generally, they're needed to account for changes to the tax laws that are discussed below. For instance, the line on page 1 of the 1040 used for reporting the $300 deduction for charitable cash contributions was moved down on the form so that the deduction no longer impacts your federal adjusted gross income (AGI). This is important because your federal AGI is used to calculate several other tax breaks and obligations. It's also used by many states as the starting point for determining your state income tax liability.

Lines 19 and 28 on page 2 of the 1040 form were also adjusted to account for the fact that the child tax credit is fully refundable for the 2021 tax year. Line 27 was also modified and expanded (including a new check box) to satisfy changes to the earned income tax credit. (See more about changes to the child tax credit and earned income credit below.)

The idea of having a postcard-size tax form has been totally abandoned, too. We see this in the expansion of Schedules 1, 2, and 3 that go with the 1040 form. For 2020 returns, each of these schedules fit on one page. Now, for 2021 tax returns, they're each two pages long. The extra length is due to various additions to income, "above-the-line" deductions, extra taxes, and less common credits now getting their own line on these forms instead of being lump together as an "other" item to include.

Approximately 90% of all taxpayers claim the standard deduction instead of itemized deductions. Fortunately, the standard deduction amounts you'll use on your 2021 tax return are larger than last year, thanks to the annual adjustment for inflation. For the 1040 form you'll complete this year, married couples filing a joint return can claim a $25,100 standard deduction. That's a $300 increase over the 2020 tax year amount. For each spouse 65 years of age or older, you can tack on an additional $1,350 ($1,300 for 2020).

Single filers can claim a $12,550 standard deduction on their 2021 tax return ($12,400 for 2020). That jumps to $14,250 if you're at least 65 years old ($14,050 for 2020).

For head-of-household filers, the standard deduction for 2021 tax returns is $18,800 ($18,650 for 2020), plus an additional $1,700 if they're at least 65 years old.

Regardless of their filing status, blind people can add an additional $1,350 to their 2021 standard deduction ($1,700 if they're unmarried and not a surviving spouse).

The tax rates you'll see on your 2021 tax return are the same as they were last year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. However, the income ranges that apply to each tax rate bracket have changed. Use the tables below to find the appropriate tax bracket for your 2021 return. It's based on your filing status and taxable income (Line 15 of your 1040 form).

Remember, though, that the tax rate associated with the bracket you fall into doesn't apply to all your income. It only applies to the amount of your taxable income that's within the bracket's range. So, for example, if you're single with $50,000 of taxable income in 2021, only the last $9,475 of your taxable income is taxed at the 22% rate ($50,000 - $40,525 = $9,475). The rest is taxed at either the 10% or 12% rate.

2021 Tax Brackets for Single Filers and Married Couples Filing Jointly

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2021 Tax Brackets for Married Couples Filing Separately and Head-of-Household Filers

If you hold on to a capital asset (e.g., stocks, bonds, real estate, art, etc.) for at least one year, any gains from the sale of the asset are taxed at a lower capital gains rate – either 0%, 15%, or 20%. The same rates apply to qualified dividends. Which rate applies to you depends on your taxable income.

For your 2021 federal income tax return, the 0% rate applies if you're single with taxable income up to $40,400 ($40,000 for 2020), a head-of-household filer with taxable income up to $54,100 ($53,600 for 2020), or a married couple filing a joint return with up to $80,800 of taxable income ($80,000 for 2020).

The 20% rate kicks in at $445,851 of taxable income for single filers ($441,451 for 2020), $473,751 for head-of-household filers ($469,051 for 2020), and $501,601 for joint filers ($496,601 for 2020).

If your taxable income falls between the 0% and 20% thresholds for your filing status, then the 15% rate applies.

As mentioned above, the $300 deduction for cash contributions to charity no longer affects your federal AGI. There's also another important change to this deduction for 2021 tax year returns – married couples can now deduct up to $600. For 2020 returns, married couples who filed jointly could only deduct $300. However, one deduction is allowed per person now, which means each spouse can deduct up to $300 on a joint 2021 return.

Note that this deduction is only available if you claim the standard deduction. It also expired at the end of 2021, so you won't be able to claim it on your 2022 return.

Several significant upgrades to the 2021 earned income tax credit (EITC) were made by the American Rescue Plan Act. The biggest changes will allow more childless workers to claim the EITC on their 2021 tax return. For one thing, the minimum age for claiming the credit without a qualifying child is lowered from 25 to 19 (except for certain full-time students). Workers over the age of 65 can claim the credit on their 2021 return, too. The maximum credit available for workers without a qualifying child also jumps from $543 to $1,502. Expanded eligibility rules for former foster youth and homeless youth were put in place for the 2021 tax year as well.

While the modified rules listed above for childless workers only apply for the 2021 tax year, the American Rescue Plan Act made a few other changes to the EITC that are permanent. For example, the $3,650 limit on a worker's investment income is bumped up to $10,000, and the cap will be adjusted for inflation each year going forward. In addition, certain married couples who are separated can now claim the credit on separate tax returns. And certain workers who can't satisfy the EITC identification requirements for their children can now qualify for the credit as a childless worker.

Finally, as with the 2020 EITC, you can use your 2019 earned income to calculate your 2021 EITC if it's more than your 2021 earned income. Since this can increase or decrease your EITC, calculate the credit using both your 2019 and 2021 earned income to see which method will save you the most money.

To calculate your EITC, complete the worksheets associated with Lines 27a, 27b, and 27c of Form 1040 in the instructions for Form 1040. If you have a qualifying child, also complete Schedule EIC and attach it to your 1040 form.

As with the earned income tax credit, the American Rescue Plan Act made major improvements to the child tax credit for the 2021 tax year. For instance, the credit amount for 2021 tax returns was increased from $2,000-per-child to $3,000-per-child six to 17 years of age and to $3,600-per-child five years old and younger. However, the extra $1,000 or $1,600 is phased out for single filers with a federal AGI above $75,000, head-of-household filers with a federal AGI above $112,500, and joint filers with a federal AGI above $150,000. The credit is further reduced under pre-existing rules for single and head-of-household filers with a federal AGI above $200,000 and married couples filing jointly with a federal AGI above $400,000.

Any child tax credit claimed on your 2021 return is also fully refundable for most parents, even if you don't have any earned income (normally, the credit is only partially refundable – up to $1,400-per-child – and you must have at least $2,500 of earned income). Children who are 17 years old also qualify for the 2021 credit (child normally must be 16 or younger to qualify). Finally, unless you opted-out of the payments, families received 50% of their estimated 2021 child tax credit amount in advance through monthly payments sent between July 15 and December 15 last year.

To calculate the child tax credit allowed on your 2021 tax return, you must subtract the monthly payments you received last year from the total credit that you're otherwise entitled to claim for the 2021 tax year. (The IRS will send you a Letter 6419 showing the amount paid to you in monthly payments.) If the total child tax credit amount is more than your combined monthly payments, you can claim the excess amount as a credit on your return. However, if the total credit amount is less than your payments, you might have to pay back the extra child credit payments.

Use Schedule 8812 to reconcile the advance payments you received last year with the actual child tax credit you're entitled to claim on your 1040 form, and to see if you need to pay back any payments (they will be paid back in the form of an additional tax calculated Part III of the schedule).

For more information about claiming the 2021 credit, see Child Tax Credit FAQs for Your 2021 Tax Return.

Parents benefiting from the child tax credit enhancements may be able to cut their 2021 tax bill even further because of big changes to the child and dependent care credit made by the American Rescue Plan Act. For example, the maximum credit is increased from 35% to 50% of eligible expenses for the 2021 tax year. Plus, the credit percentage won't be reduced for families making less than $125,000 a year (instead of $15,000 per year), and all taxpayers earning less than $438,000 can claim at least a partial credit on their 2021 return.

The 2021 credit applies to more child or dependent care expenses, too. The credit percentage is applied to as much as $8,000 of eligible expenses for one child/disabled person and up to $16,000 of expenses for two or more (the amounts are usually $3,000 and $6,000, respectively). That means the total credit amount can be as high as $4,000 if you have just one child/disabled person and $8,000 if you have more ($1,050 and $2,100, respectively, for 2020).

The child and dependent care credit for the 2021 tax year is also fully refundable for most people (it's usually a nonrefundable credit). Form 2441 is used to calculate the credit.

See Your Child Care Tax Credit May Be Bigger on Your 2021 Tax Return for details.

The American Rescue Plan Act improved the premium tax credit for 2021 and 2022 to lower premiums for people who buy health insurance through an Obamacare exchange (e.g., HealthCare.gov) on their own. The credit amount was increased for eligible taxpayers by reducing the percentage of annual income that households are required to contribute toward their health insurance premium. The law also allowed the credit to be claimed by people with an income above 400% of the federal poverty line.

For certain people who purchase health insurance through an exchange, an estimated premium tax credit amount is paid in advance to the insurance company. If advance payments are made on your behalf, you must reconcile the credit and the advance payments when you file your tax return. If the advance payments are greater than the actual allowable credit, the difference (subject to certain repayment caps) usually must be paid back. However, the American Rescue Plan Act eliminated the repayment requirement – but only for the 2020 tax year. As a result, excess advance payments made in 2021 will have to be repaid when you file your 2021 tax return.

Use Form 8962 to calculate your premium tax credit and reconcile it with any advance payments. Also make sure you submit Form 8962 with the rest of your 2021 tax return.

The nonrefundable credit for expenses related to the adoption of a child is a little larger for the 2021 tax year. For 1040 forms filed this year, the credit can be worth up to $14,440 ($14,300 for 2020). Plus, the full credit is available for a special-needs adoption, even if it costs less.

The credit begins to phase out if your modified AGI is over $216,660 and it's eliminated altogether if your modified AGI reaches $256,660 ($214,520 and $254,520, respectively, for 2020). To claim the credit, complete Form 8839 and report the credit amount on Line 6c of Schedule 3. Also submit Form 8839 with the rest of your 2021 tax return.

The income tax exclusion for company-paid adoption aid was also increased from $14,300 to $14,440 for the 2021 tax year.

The alternative minimum tax (AMT) was originally designed to hit only wealthier Americans. However, the AMT exemption amount wasn't always adjusted annual for inflation – but it is now. For the 2021 tax year, the AMT exemption jumped from $113,400 to $114,600 for married couples filing a joint return and from $72,900 to $73,600 for single and head-of-household filers.

The phase-out ranges for the AMT exemption are adjusted for inflation each year, too. For 2021 tax returns, the exemption is gradually reduced and can ultimately be eliminated if alternative minimum taxable income (AMTI) on a joint return is between $1,047,200 and $1,505,600 ($1,036,800 and $1,490,400 for 2020). For single and head-of-household filers, the 2021 phase-out range is $523,600 to $818,000 of AMTI ($518,400 to $810,000 for 2020). The 2021 range for married people filing a separate return is $523,600 to $752,800 ($518,400 to $745,200 for 2020).

In addition, the 28% AMT tax rate doesn't kick on 2021 tax returns until you hit $199,900 of AMTI. That's an increase over the 2020 threshold, which was AMTI of $197,900 or more.

Use Form 6251 to calculate your AMT and file the form with your 2021 Form 1040.

Say goodbye to the tuition and fees deduction, which was worth up to $4,000 per year. It was repealed starting with the 2021 tax year.

On the bright side, the phase-out thresholds for the lifetime learning credit were increased. They're now the same as the phase-out amounts for the American Opportunity credit. So, beginning with 2021 tax returns, the lifetime learning credit is gradually reduced to zero for joint filers with a modified AGI from $160,000 to $180,000 ($118,000 to $138,000 for 2020) and single filers with a modified AGI between $80,000 to $90,000 ($59,000 and $69,000 for 2020). If you're claiming either the lifetime learning credit or the American Opportunity credit, you must first complete Form 8863 and then attach it to your 1040 form.

The phase-out ranges are also higher in 2021 for the exclusion of interest on Series EE and I savings bonds redeemed to help pay for tuition and fees for college, graduate school, or vocational school. For 2021 tax returns, the exclusion starts to phase out for joint filers with a modified AGI exceeding $124,800 and for other people with a modified AGI of $83,200 or more ($123,550 and $82,350, respectively, for 2020). The exclusion is totally phased-out for joint filers with a modified AGI of $154,800 or more and for other taxpayers with a modified AGI of at least $98,200 ($153,550 and $97,350, respectively, for 2020). You must compete Form 8815 to claim the exclusion and then report the exclusion amount on Line 3 of Schedule B.

The recovery rebate credit is back, but with one important change. As you may recall, this credit made its first appearance on the 2020 Form 1040 and was available for people who didn't receive a first or second stimulus check, or who didn't receive the full stimulus check amount they were entitled to.

For 2021 tax returns, the credit is for people who didn't receive a third stimulus check (or didn't receive the full amount). Those payments were for up to $1,400, plus an additional $1,400 for each dependent in your family. Similar to the monthly child tax credit payments the IRS sent last year, your third stimulus check was an advance payment of the recovery rebate credit. As a result, when you file your 2021 return, you must reduce the recovery rebate credit you're entitled to claim by the amount of your third stimulus check. (The IRS will send you a Letter 6475 showing the amount of your third stimulus check.) For most people, your third stimulus check payment will equal the 2021 recovery rebate credit allowed. If that's the case for you, the credit will be reduced to zero. But if your third stimulus check was less than the credit, your recovery rebate credit will equal the difference. And what if your third stimulus check was more than your 2021 recovery rebate credit? You get to keep the difference!

Use our Third Stimulus Check Calculator to see you how large your third stimulus check should have been.

Two tax breaks that encourage saving for retirement were tweaked for the 2021 tax year. In both cases, the changes are the result of annual adjustments for inflation.

The first retirement-related change for 2021 tax returns is to the deduction for contributions to a traditional IRA. If either you or your spouse was covered by an employer retirement plan, your IRA deduction may be reduced (potentially to zero), depending on your filing status and income. The income levels that trigger a reduction for 2021 returns have been adjusted. For married couples filing a joint return, the deduction is gradually phased out if you're modified AGI is between $105,000 and $125,000 (between $104,000 and $124,000 for 2020 returns). For single and head-of-household filers, the phase-out range is from $66,000 to $76,000 ($65,000 to $75,000 for 2020).

If only one spouse is covered by a retirement plan at work, the deduction is reduced if the couple's modified AGI exceeds $198,000, and it's totally eliminated if their modified AGI hits $208,000 ($196,000 and $206,000, respectively, for 2020). (NOTE: If you made any nondeductible contributions to a traditional IRA for 2021, report them on Form 8606.)

The second change is to the "Saver's Credit," which encourages lower- and middle-income people to save for retirement. The credit is allowed for either 10%, 20%, or 50% of the first $2,000 ($4,000 for joint filers) you contribute to retirement accounts, depending on your filing status and income. The lower your income, the higher the percentage you can use to calculate the credit. For 2021 tax returns, single filers, married people filing a separate return, and qualified widow(er)s can claim a 50% credit if their AGI is $19,750 or less ($19,500 for 2020). They can claim a 20% credit if their AGI is from $19,751 to $21,500 ($19,501 to $21,250 for 2020), and the 10% credit is available if their AGI is from $21,501 to $33,000 ($21,251 to $32,500).

For married couples filing a joint return, the 50% credit is available if their AGI doesn't exceed $39,500 ($39,000 for 2020), the 20% credit is available if their AGI is from $39,501 to $43,000 ($39,001 to $42,500 for 2020), and the 10% credit is available if their AGI is from $43,001 to $66,000 ($42,501 to $65,000 for 2020).

The 50% credit can be claimed by head-of-household filers with an AGI of $29,625 or less ($29,250 for 2020), while they can claim the 20% credit with an AGI from $29,626 to $32,250 ($29,251 to $31,875 for 2020) and the 10% credit with an AGI from $32,251 to $49,500 ($31,876 to $48,750 for 2020).

To claim the credit, complete Form 8880 and send it to the IRS with your 1040 form.

For 2021 tax returns, standard mileage rate for business driving is 56¢ a mile – that's less than the 57.5¢ per mile for 2020. The rate for medical travel and military moves also dropped for the 2021 tax year from 17¢ to 16¢ a mile.

The mileage rate for charitable driving doesn't change from year-to-year. So, it stayed put at 14¢ a mile for 2021 returns.

Self-employed taxpayers can claim some tax breaks that other people can't. And some of those tax breaks are tweaked for 2021 tax returns. For instance, the sick or family leave credits self-employed people could claim on their 2020 tax return if they missed work for Covid-related reasons was extended for 2021 – but not for the full year. For 2021 returns, the credits are only available for qualified absences through September 30, 2021. In addition, the family leave credit can only be claimed for 50 days missed from January 1 to March 31, 2021, but it can be claimed for up to 60 days missed from April 1 to September 30, 2021. Self-employed people should use Form 7202 to calculate the sick and family leave credits they're entitled to claim on their 2021 1040 form.

The income threshold for limits on the 20% deduction for qualified business income were also adjusted for the 2021 tax year. The taxable income threshold is $329,800 for married couples filing a joint return, $164,925 for married people filing a separate return, and $164,900 for all others ($326,600 for joint filers and $163,300 for all others for 2020 returns). Use Form 8995 or Form 8995-A to figure your qualified business income deduction.

Self-employed people who are wining and dining clients can take advantage of another perk for both the 2021 and 2022 tax years. The deduction for business meals at a restaurant is increased from 50% to 100%. This deduction is claimed on Line 24b of Schedule C.

If a self-employed person had a Paycheck Protection Program (PPP) loan forgiven in 2021, the canceled debt is not taxable income and doesn't have to be reported on Form 1040. However, if you have tax-exempt income resulting from the discharge of a PPP loan last year, you must attach a statement to your 2021 tax return that includes certain information related to your PPP loan (see the instructions to Form 1040 for details). You should also write "RP2021-48" at the top of the statement.

Unfortunately, there are also a couple of negative changes that may increase the 2021 tax bill for some self-employed taxpayers. First, none of the self-employment taxes owed for the 2021 tax year can be deferred as they could on 2020 returns. In fact, half of any 2020 tax deferred had to be paid by the end of 2021, while the rest is due by the end of 2022. Second, the cap on deductible business losses is back after being suspended for the 2018 to 2020 tax years. For 2021 tax returns, the inflation-adjusted limit is $262,000 ($524,000 for married couples filing a joint return). Form 461 is used to calculate a self-employed taxpayer's limitation on business losses.

The $10,200 exemption for unemployment compensation in effect for the 2020 tax year is no more. Under the American Rescue Plan Act, which authorized the exemption for families with a federal AGI less than $150,000, the tax break was for one year only.

As a result, any unemployment compensation you received last year will be fully taxed on your 2021 tax return. Report the benefits on Line 7 of Schedule 1.

If you're paying for long-term care insurance, you might be able to deduct a portion of your premiums – and the deduction maximums, which are based on age, are higher for the 2021 tax year. Taxpayers age 71 or older can deduct up to $5,640 per person on their 2021 tax return ($5,430 for 2020). If you're 61 to 70 years old, you can deduct as much as $4,520 of your premiums ($4,350 for 2020). Anyone 51 to 60 years old can write-off up to $1,690 ($1,630 for 2020). For people 41 to 50 years of age, the max is $850 ($810 for 2020). And, finally, the maximum deduction is $450 if you're 40 or younger ($430 for 2020).

Long-term care insurance premiums are only deductible as medical expenses for most people, which means they must itemize deductions on Schedule A to claim the tax break. However, self-employed people can deduct their premiums on Line 17 of Schedule 1 without having to itemize.

Before the 2021 tax year, canceled or forgiven student loan debt was considered taxable income. However, from 2021 to 2025, most canceled student loan debt that was incurred for a post-secondary education is tax-free. Therefore, you shouldn't report qualified student loan debt that was canceled last year on Line 8c of Schedule 1.

The IRS has also told lenders and student loan servicer providers not to file Form 1099-C or submit payee statements for qualified student loan debt that's discharged, canceled, or otherwise forgiven through 2025. So, if you do receive a 1099-C form reporting discharged student loan debt that you believe is not taxable, contact the lender or loan service provider that issued the form and ask them to send a corrected form.

Americans working abroad may be able to exclude all or a portion of their foreign-earned income from taxable income on their U.S. tax return. For 2021 returns, the maximum exclusion amount is $1,100 higher than it was for the 2020 tax year – it jumped from $107,600 to $108,700.

In addition to the foreign earned income exclusion, taxpayers living abroad may also be able to claim an exclusion or deduction for their foreign housing. For the 2021 tax year, the maximum foreign housing exclusion is generally $15,218 ($15,064 for 2020), although it can be higher in certain high-cost areas.

Use Form 2555 to figure both your foreign earned income exclusion and foreign housing exclusion/deduction.

Self-employment has its perks, but being your own boss can lead to headaches come tax season. In addition to the income tax, you’ll need to pay self-employment taxes that support the Social Security and Medicare programs.

But there are ways to reduce the amount you owe.

At the start of the new year, you may receive a 1099-NEC tax form or 1099-K tax form. You also may have received other income in the form of cash or checks for work performed in the previous year from being self-employed.

One of the best ways to lower your taxes paid on self-employed income is to increase your business expenses. As a self-employed taxpayer, you can write off expenses and take certain deductions against that income to help reduce your tax liability.

However, it is very important to hold on to all receipts for any business expenses related to purchases or professional services received and to keep accurate, up-to-date records of your business’s activity.

Here are four easy ways to keep your taxes down if you are self-employed.

1. Driving expenses

If your self-employed income is from operating a ride-hailing or delivery business through platforms such as Uber or Lyft, you will be able to take a vehicle expense deduction. This allows you to recover some costs associated with wear and tear on your vehicle to operate your business.

Be sure to keep track of your business miles, personal miles and commuting miles as you will need to provide this information to take the deduction.

2. Home office expenses

Home office expenses is another deduction that you can take advantage of if you utilize part of your home as your office space to conduct business. A home office tax deduction can be calculated using the simplified deduction method, which is a prescribed rate of $5 per square foot of your home that is used for business up to 300 square feet.

Or you can use the actual expense deduction method, which allows you to write off a percentage of expenses related to rent, utilities, mortgage interest, property taxes and repairs and maintenance.

Other common deductible expenses related to your home office include website services, computer software, merchant fees, electronics and other supplies needed to run your business.

You also can deduct communication expenses, such as a portion of your internet and cellphone bill, as long as those costs are directly related to your business. For example, if 20% of your time on the phone is spent on business, you could deduct 20% of your phone bill.

3. Depreciation deductions

If you purchase equipment, such as a laptop or a leaf blower for your business, you can categorize it as an asset and take a depreciation deduction — which allows you to spread the expense over the useful life of your asset.

For example, let’s say you purchased a new ergonomic office chair at the beginning of the year for $400. You will be able to classify this as an asset and take a $57.14 depreciation expense deduction each year over a useful life of seven years, which is standard for office furniture.

You can also take a Section 179 election to fully expense and deduct the asset in the current year — instead of depreciating it — to further reduce your tax liability. This is an annual income tax deduction taken by filling Form 4562 with your tax return.

4. S Corp election

Another way to keep your taxes down is by changing your business structure into an S Corp election with the IRS. You can make the S Corp election for your corporation or limited liability company.

For example, when operating your business as an S Corp, if your business income is $100,000 per year and you pay yourself a reasonable salary of $60,000, all income that exceeds your salary — $40,000 in this case — is not subject to self-employment taxes. Only the salary of $60,000 is subject to self-employment taxes. However, if operating your business as a sole proprietor, self-employment tax is due on the entire amount of $100,000 business income.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Is inflation wreaking havoc on your family budget? Want to save some money on your back-to-school shopping? If so, see if your state (or one nearby) is holding a sales tax holiday this weekend. As every parent knows, the bill for new clothes, shoes, backpacks, and other schools supplies can get very high, very fast. And when you add high inflation to the mix, it's just outrageous. So, any discount you can get helps. That's why some states cut you a break on back-to-school shopping by holding a tax-free weekend (or week) before the school year starts.

If you purchase qualifying items during one of these tax-free periods, the store won't tack on sales tax at the register. A few of these back-to-school sales tax holidays have already come and gone, but August 5 to 7 is the most popular weekend for them this year. In most cases, the sales tax holiday starts on a Friday and runs through the weekend. However, the exact start date, duration, and qualifying items differ from state to state. So, if you live in (or near) a state with one of these tax-free weekends going on now, make sure you know the right time and scope of the available sales tax exemption before you head out for your back-to-school shopping.

To get you up to speed, we've identified the 12 states with a sales tax holiday for back-to-school shopping running through (or starting) this weekend (August 5 to 7, 2022). There's also an overview of the sales tax exemption for each state and links to additional information. (Unless otherwise noted, the exemptions cover both state and local sales taxes.) The school year will be here before you know it…and we hope you can save a few bucks on taxes before it arrives during one of these tax-free weekends.

Sales tax rates and averaged combined state and local sales tax rates are from the Tax Foundation as of July 1, 2022.

• State sales tax rate: 6.5%
• Average combined state and local sales tax rate: 9.47%
• Dates of sales tax holiday: August 6 to 7, 2022
• Go to the Arkansas State Tax Guide

You can save on back-to-school shopping in Arkansas on August 6 and 7 this year. During the state's sales tax holiday, there's no sales tax on general clothing costing less than $100, various accessories priced below $50, electronic devices commonly used by students, school supplies (including art supplies), and school instructional materials. The exemption doesn't cover sewing equipment and supplies, protective equipment, sport or recreational equipment, belt buckles sold separately, and many other items. The Arkansas Department of Finance and Administration has more detailed information about what's exempt and what's taxable during the tax-free weekend on its website.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 7.01%
• Dates of sales tax holiday: July 25 to August 7, 2022
• Go to the Florida State Tax Guide

Here's some good news for Florida parents: The state's back-to-school sales tax holiday runs for two weeks – and it's already underway. This year, shopping in Florida got a little cheaper back on July 31, and it stays that way through August 7. The state's sales tax holiday applies to clothing, footwear, backpacks, and certain other accessories costing $100 or less; school supplies costing $50 or less; learning aids and jigsaw puzzles priced at $30 or less; and personal computers or personal computer-related accessories costing no more than $1,500. "Clothing" includes wallets and handbags, but not watches or jewelry. The tax exemption also doesn't apply to sales made in a theme park, entertainment complex, hotel, or airport. For more information, including examples of qualifying items, see the Florida Department of Revenue's website.

• State sales tax rate: 6.25%
• Average combined state and local sales tax rate: 8.73%
• Dates of sales tax holiday: August 5 to 14, 2022
• Go to the Illinois State Tax Guide

The Illinois sales tax holiday for back-to-school shopping lasts over a week. It starts on August 5 and ends on August 14. However, the downside to the state's tax-free holiday is that the state sales tax rate is only reduced to 1.25%, not eliminated, and local sales taxes, which can be as high as 5.25%, aren't waived or reduced. The sales tax reduction applies to clothing and footwear priced at $125 or less and typical school supplies used by students in the course of study. Computers and related equipment aren't included in the sales tax holiday. A more detailed list of what's exempt and what isn't can be found on the Illinois Department of Revenue Service's website.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 6.94%
• Dates of sales tax holiday: August 5 to 6, 2022
• Go to the Iowa State Tax Guide

In Iowa, there's no sales tax on clothing or footwear sold for less than $100 on August 5 and 6. The exemption applies to each article priced under $100 regardless of how many items are sold to a customer. However, it doesn't apply in any way to the price of an item selling for $100 or more. There's also a long list of specific items that don't qualify for the exemption, such as watches, jewelry, umbrellas, sporting equipment, and special clothing or footwear designed primarily for athletic activity. A detailed list of what's exempt and what's taxable can be found on the Iowa Department of Revenue's website.

• State sales tax rate: 4.225%
• Average combined state and local sales tax rate: 8.3%
• Dates for sales tax holiday: August 5 to 7, 2022
• Go to the Missouri State Tax Guide

Missouri's tax-free weekend for certain back-to-school purchases begins on August 5 and ends August 7. During the holiday, sales of school supplies costing $50 or less, clothing priced up to $100, graphing calculators valued at $150 or less, computer software costing $350 or less, and personal computers and peripheral devices priced up to $1,500 are exempt from sales tax. Cities, counties, and special tax districts choose whether they will participate in the back-to-school sales tax holiday. Cities, counties, and special taxing districts can opt in or out of this holiday for their local sales tax (click the city, county and district links to see lists of local jurisdictions not participating in the sales tax holiday).

• State sales tax rate: 5%
• Average combined state and local sales tax rate: 7.72%
• Dates of sales tax holiday: August 5 to 7, 2022
• Go to the New Mexico State Tax Guide

New Mexico's 2022 back-to-school sales tax holiday runs from August 5 to 7. During the holiday, there's no gross receipts (sales) tax on clothing or footwear priced at less than $100; computers costing up to $1,000; related computer hardware priced at $500 or less; book bags, backpacks, maps and globes valued at under $100; handheld calculators for under $200; and basic school supplies priced under $30. However, the tax exemption doesn't apply to watches, radios, CD players, headphones, sporting equipment, cell phones, portable desktop telephones, copiers, office equipment, furniture, or fixtures. The New Mexico Taxation and Revenue Department has a detailed list of what is or isn't covered on its website.

• State sales tax rate: 5.75%
• Average combined state and local sales tax rate: 7.24%
• Dates of sales tax holiday: August 5 to 7, 2022
• Go to the Ohio State Tax Guide

This year, Ohio's back-to-school sales tax holiday is from August 5 to 7. During this time, there's no sales tax on purchases of clothing priced at $75 or less, school supplies priced at $20 or less, and school instructional materials priced at $20 or less. Clothing accessories, protective equipment, sewing equipment and supplies, sports or recreational equipment, belt buckles, costume masks, patches and emblems, and items used in a trade or business are not exempt. The Ohio Department of Taxation has more information about what is or isn't exempt during the sales tax holiday on the FAQ section of its website.

• State sales tax rate: 4.5%
• Average combined state and local sales tax rate: 8.99%
• Dates of sales tax holiday: August 5 to 7, 2022
• Go to the Oklahoma State Tax Guide

In Oklahoma, the annual back-to-school sales tax holiday is from August 5 to 7 this year. During the holiday, sales of clothing or footwear are tax-free if the sales price is less than $100. The sales tax exemption doesn't apply to the sale of accessories (e.g., jewelry, handbags, luggage, umbrellas, wallets, watches, and other similar items), special clothing or footwear primarily designed for athletic activity or protective use, or to the rental of clothing or footwear (e.g., tuxedo or bowling shoe rentals). A nonexclusive list of "clothing" that is exempt from sales tax during the holiday is on the Oklahoma Tax Commission's website.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 7.44%
• Dates of sales tax holiday: August 5 to 7, 2022
• Go to the South Carolina State Tax Guide

Shoppers in South Carolina should plan to buy their back-to-school gear from August 5 to 7 this year. That's when they can avoid paying sales tax on purchases of clothing, footwear, accessories, school supplies, computers, software, printers, printer supplies, and certain bed and bath supplies. The exemption does not, however, apply to sales of jewelry, cosmetics, eyewear, wallets, watches, furniture, or any item to be used in a trade or business. The rental of clothing or footwear is taxable, too. Additional examples of items that are both exempt and taxable items during the sales tax holiday are posted on the South Carolina Department of Revenue's website.

• State sales tax rate: 6.25%
• Average combined state and local sales tax rate: 8.2%
• Dates of sales tax holiday: August 5 to 7, 2022
• Go to the Texas State Tax Guide

Texas holds a tax-free weekend for back-to-school shoppers from August 5 to 7. During this annual sales tax holiday, you can buy most clothing, footwear, school supplies, and backpacks without having to pay sales tax if the item purchased is sold for less than $100. The Texas Comptroller's office has lists of exempt and taxable items for clothing, footwear and other items and for school supplies on its website.

• State sales tax rate: 5.3% (includes mandatory 1% local tax)
• Average combined state and local sales tax rate: 5.75%
• Dates of sales tax holiday: August 5 to 7, 2022
• Go to the Virginia State Tax Guide

Virginia's sales tax holiday applies to much more than just back-to-school supplies. From August 5 to 7, you can buy qualifying school supplies, clothing, footwear, hurricane and emergency preparedness items, energy-efficient appliances, and water-saving products without paying sales tax. However, for purchases to be tax-free, the items sold cannot exceed certain price limits. For instance, school supplies can't be sold for more than $20, and clothing and footwear must be priced at $100 or less. For hurricane and emergency preparedness products, portable generators can't cost more than $1,000, gas-powered chainsaws must be sold for $350 or less, chainsaw accessories must be priced at or below $60, and other hurricane preparedness items can't be sold for more than $60. Energy-efficient (Energy Star) and water-saving (WaterSense) products can't be priced above $2,500. The Virginia Department of Taxation has lists of exempt and taxable school supplies, clothing, and footwear; hurricane and emergency preparedness products; and Energy Star and WaterSense products on its website (click on links to view lists).

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 6.55%
• Dates of sales tax holiday: August 5 to 8, 2022
• Go to the West Virginia State Tax Guide

This weekend's sale tax holiday in West Virginia stretches to Monday. You can start shopping tax-free for school supplies on August 5 and continue until August 8. Clothing (including footwear), school supplies and instructional material, computers, and even some sports equipment qualify for the sales tax break if they're priced below certain thresholds. For example, clothing can't be priced above $125. School supplies must cost $50 or less, while school instruction materials must $20 or less. Laptops and tablets must have a purchase price of $500 or less, and eligible sporting equipment can't cost more than $150. More information about what is or isn't exempt during the sales tax holiday is available on the West Virginia State Tax Department's website.

Sales tax holidays offer a great way to save money on back-to-school supplies, emergency preparedness kits, energy-saving appliance, and even holiday gifts. Let's say you live in Louisiana and you're shopping for the holidays. You have your eye on a new TV that costs $1,000 at the local big-box store. If, say, you buy the TV on November 13, you'll pay $44.50 in state sales tax. But if you wait just one week, when Louisiana is having a tax-free weekend, you won't pay any state sales tax at all. It's that easy!

Seventeen states have one or more sales tax holidays in 2020. If you plan your shopping around these tax-free periods, you can save big bucks on a wide range of items you're probably going to buy anyway. The dates for these no-tax holidays are scattered throughout the year. However, they typically fall on a weekend, but in some cases go on for an entire week. Here's a peek at the 17 states that offer sales tax holidays, as well as the products that qualify in each state. Unless otherwise noted, the exemptions cover both state and local sales taxes.

Sales tax rates and averaged combined state and local sales tax rates are from the Tax Foundation as of July 1, 2020

• State sales tax rate: 4%
• Average combined state and local sales tax rate: 9.22%
• First sales tax holiday: Severe Weather Preparedness
• Dates of first holiday: February 21 to 23, 2020
• Second sales tax holiday: Back-to-School
• Dates of second holiday: July 17 to 19, 2020
• Go to Alabama's Full State Profile

Alabama has two 2020 sales tax holidays. The first tax-free weekend is for severe weather preparedness supplies. It runs from February 21 to 23, 2020. Covered items include batteries, cell phone chargers, flashlights, tarps, fire extinguishers, duct tape, plywood, ice packs, and other items selling for $60 or less. Portable generators and power cords selling for $1,000 or less are also exempt. A more complete list of covered items is on the Alabama Department of Revenue's website.

The second holiday is for back-to-school shopping. It starts on July 17 and ends on July 19, 2020. The sales tax exemption generally applies to clothing costing $100 or less, computers and related items priced up to $750, school supplies priced up to $50, and books costing $30 or less. For details on what is exempt and what is taxable, see the guidelines on the Alabama DOR's website.

Alabama counties and cities must opt in for the sales tax holidays to apply within their borders. The Alabama DOR posts lists of the participating local governments on its website (click on links to access): Severe Weather Preparedness and Back-to-School.

• State sales tax rate: 6.5%
• Average combined state and local sales tax rate: 9.53%
• Sales tax holiday: Back-to-School
• Dates: August 1 to 2, 2020
• Go to Arkansas's Full State Profile

Back-to-school shopping in Arkansas will be a little cheaper on the first two days of August this year. During the state's sales tax holiday, there's no sales tax on general clothing costing less than $100, various accessories priced below $50, school supplies (including art supplies), and school instructional materials. The exemption doesn't cover sewing equipment and supplies, protective equipment, sport or recreational equipment, belt buckles sold separately, computers and periphery equipment, software, and many other items. The Arkansas Department of Finance and Administration has a detailed list of what's exempt and what's taxable during the tax-free weekend on its website.

• State sales tax rate: 6.35%
• Average combined state and local sales tax rate: 6.35%
• Sales tax holiday: Back-to-School
• Dates: August 16 to 22, 2020
• Go to Connecticut's Full State Profile

Connecticut gives back-to-school shoppers a whole week to buy tax-free clothing and footwear. This year, it runs from August 16 to 22, 2020. However, the sales tax exemption only applies to items costing less than $100. In addition, the sales tax holiday doesn't provide an exemption for special clothing or footwear primarily designed for athletic activity or protective use, jewelry, handbags, luggage, umbrellas, wallets, watches, and similar accessories. Safety apparel is tax-free under a separate exemption. A more detailed list of what's exempt and what isn't can be found on the Connecticut Department of Revenue Service's website.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 7.05%
• First sales tax holiday: Disaster Preparedness
• Dates of first holiday: May 29 to June 4, 2020
• Second sales tax holiday: Back-to-School
• Dates of second holiday: August 7 to 9, 2020
• Go to Florida's Full State Profile

Floridians prepping for hurricane season can save a few bucks during the Sunshine State's disaster preparedness sales tax holiday, which runs from May 29 to June 4, 2020. Whether sales tax is waived on a particular item depends on the price of the item. For example, reusable ice packs are covered if they sell for $10 or less. Flashlights can't cost more than $20 to qualify for the sales tax exemption. Gas cans must be $25 or less, while batteries are exempt if they're priced no higher than $30. The list for items costing $50 or less includes radios, tarps, and bungee cords. The highest priced item – portable generators – can't cost more than $750 for the sales tax exemption to apply. For a complete list of qualifying items and prices, see the Florida Department of Revenue's website.

The state also has a back-to-school sales tax holiday from August 7 to 9, 2020. It applies to clothing, footwear, and backpacks costing $60 or less; school supplies costing $15 or less; and the first $1,000 of the price of personal computers or personal computer-related accessories. "Clothing" includes face masks, wallets and handbags, but not watches or jewelry. The tax exemption also doesn't apply to sales made in a theme park, entertainment complex, hotel, or airport. For examples of taxable and exempt items, see the Florida DOR's website.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 6.94%
• Sales tax holiday: Back-to-School
• Dates: August 7 to 8, 2020
• Go to Iowa's Full State Profile

On August 7 and 8, 2020, no sales tax is owed on purchases in Iowa of clothing or footwear having a selling price of less than $100. The exemption applies to each article priced under $100 regardless of how many items are sold to a customer. However, it doesn't apply in any way to the price of an item selling for $100 or more. There's also a long list of specific items that don't qualify for the exemption, such as watches, jewelry, umbrellas, sporting equipment, and special clothing or footwear designed primarily for athletic activity. A detailed list of what's exempt and what's taxable can be found on the Iowa Department of Revenue's website.

• State sales tax rate: 4.45%
• Average combined state and local sales tax rate: 9.52%
• First sales tax holiday: Hunting Supplies
• Dates of first holiday: September 4 to 6, 2020
• Second sales tax holiday: Multiple Product Categories
• Dates of second holiday: November 20 to 21, 2020
• Go to Louisiana's Full State Profile

Louisiana's "Second Amendment" sales tax holiday only applies to local sales tax. So, from September 4 to 6, 2020, you still have to pay state sales tax on purchases on guns, ammunition, and other hunting supplies. Starting in 2025, the sales tax exemption will also apply to state taxes.

On November 20 and 21, 2020, there's no state sales tax on the first $2,500 of most consumer (not business) purchases in Louisiana. The sales tax exemption doesn't apply to sales of motor vehicles or meals sold by restaurants and bars (either for consumption on the premises or to-go orders). This sales tax holiday is designed to provide tax relief for residents recovering from Hurricane Laura, Hurricane Delta, and the COVID-19 pandemic.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 6%
• First sales tax holiday: Energy-Efficient Appliances
• Dates of first holiday: February 15 to 17, 2020
• Second sales tax holiday: Back-to-School
• Dates of second holiday: August 9 to 15, 2020
• Go to Maryland's Full State Profile

Maryland is one of four states with a sales tax holiday for energy-efficient appliances. In 2020, the holiday runs from February 15 to 17. During that time, you can save 6% on Energy Star appliances, such as air conditioners, washers and dryers, furnaces, heat pumps, standard size refrigerators, and dehumidifiers. (Solar water heaters are tax-exempt in Maryland throughout the year.) The weekend sales tax exemption also applies to programmable thermostats, compact fluorescent light bulbs, and LED light bulbs.

There's also an annual back-to-school sales tax holiday in Maryland. This year's holiday goes from August 9 to 15, 2020. During the week-long event, there's no sales tax on certain clothing and footwear priced at $100 or less. The first $40 spent on a backpack or bookbag is also tax-free. Accessory items, except for backpacks, aren't exempt. There's a detailed list of taxable and exempt items on the Comptroller of Maryland's website.

• State sales tax rate: 6.25%
• Average combined state and local sales tax rate: 6.25%
• Sales tax holiday: Wide Variety of Personal Items
• Dates: August 29 to 30, 2020
• Go to Massachusetts' Full State Profile

This is the king of sales tax holidays! On August 29 and 30, 2020, shoppers in Massachusetts can purchase most retail priced at $2,500 or less without having to pay sales tax. There are some exceptions, though. The sales tax holiday exemption does not apply to meals, motor vehicles, motorboats, telecommunications services, natural gas, steam, electricity, tobacco products, marijuana or marijuana products, or alcoholic beverages. The exemption also doesn't apply to purchases by businesses or purchases by individuals for business use. (Only sales to individuals for personal use or consumption are tax-free.)

• State sales tax rate: 7%
• Average combined state and local sales tax rate: 7.07%
• First sales tax holiday: Back-to-School
• Dates of first holiday: July 31 to August 1, 2020
• Second sales tax holiday: Hunting Supplies
• Dates of second holiday: August 28 to 30, 2020
• Go to Mississippi's Full State Profile

The Magnolia State has two sales tax holidays in 2020. First, there's a back-to-school holiday on July 31 and August 1 for clothing, footwear, and school supplies with a sales price of $100 or less. Accessories such as jewelry, handbags, wallets, watches, and the like do not qualify for the sales tax exemption. A list of tax exempt and taxable items can be found on the Mississippi Department of Revenue's website.

There's also a "Second Amendment" tax-free weekend in Mississippi when sales tax is waived on purchases of firearms, ammunition, and certain hunting supplies, such as archery equipment, gun and archery cases, gun and archery accessories, hearing protection, holsters, belts, and slings. The Mississippi DOR's website has a detailed list of taxable and exempt items.

• State sales tax rate: 4.225%
• Average combined state and local sales tax rate: 8.2%
• First sales tax holiday: Energy-Efficient Appliances
• Dates for first holiday: April 19 to 25, 2020
• Second sales tax holiday: Back-to-School
• Dates for second holiday: August 7 to 9, 2020
• Go to Missouri's Full State Profile

Missouri's week-long "Show Me Green" sales tax holiday runs from April 19 to 25, 2020. During that period, state sales tax is not charged on purchases of Energy Star certified clothes washers and dryers, water heaters, dishwashers, air conditioners, furnaces, refrigerators, freezers, and heat pumps. The exemption is, however, limited to appliances costing $1,500 or less. Cities, counties, and special taxing districts can also participate in the sales tax holiday by enacting an ordinance exempting their local sales tax during the holiday (click on the city, county, and district links to see lists of participating local jurisdictions).

The state also has a tax-free weekend for certain back-to-school purchases. In 2020, this sales tax holiday begins on August 7 and ends August 9. During the holiday, the state sales tax is waived for sales of school supplies costing $50 or less, clothing priced up to $100, graphing calculators valued at $150 or less, computer software costing $350 or less, and personal computers and peripheral devices priced up to $1,500. Cities, counties, and special tax districts to choose whether they will participate in the Back-To-School Sales Tax Holiday. As with the "Show Me Green" holiday, cities, counties, and special taxing districts can opt in or out of this holiday for their local sales tax (click the city, county and district links to see lists of local jurisdictions not participating in the sales tax holiday).

• State sales tax rate: 5.125%
• Average combined state and local sales tax rate: 7.83%
• First sales tax holiday: Back-to-School
• Dates of first holiday: August 7 to 9, 2020
• Second sales tax holiday: Small Business Saturday
• Date of second holiday: November 28, 2020
• Go to New Mexico's Full State Profile

During New Mexico's back-to-school gross receipts (sales) tax holiday, no tax is levied on clothing or footwear priced at less than $100; computers costing up to $1,000; related computer hardware priced at $500 or less; book bags, backpacks, maps and globes valued at under $100; handheld calculators for under $200; and basic school supplies priced under $30. The tax exemption does not apply to watches, radios, CD players, headphones, sporting equipment, portable or desktop telephones, copiers, office equipment, furniture, or fixtures. The New Mexico Taxation and Revenue Department has a detailed list of what is or isn't covered on its website. The back-to-school holiday runs from August 7 to 9, 2020.

New Mexico also has a sales tax holiday on "Small Business Saturday," which is on November 28, 2020. On this day, the state's gross receipts (sales) tax doesn't apply to purchases of qualifying items at certain small business. The purchased item must cost less than $500. Examples of qualify items include clothing, accessories, sporting goods, camping equipment, tools, books, journals, paper, writing instruments, greeting cards, postcards, works of art, art supplies, floral arrangements, indoor plants, cosmetics, musical instruments, cookware, small home appliances, bedding, towels, bath accessories, furniture, toys, games, and electronics. To make sales on this day without collecting tax, a business must have its primary place of business in New Mexico and employ no more than 10 employees at any point during the year. Businesses that operate under a franchise agreement don't qualify.

• State sales tax rate: 5.75%
• Average combined state and local sales tax rate: 7.17%
• Sales tax holiday: Back-to-School
• Dates: August 7 to 9, 2020
• Go to Ohio's Full State Profile

This year, Ohio's back-to-school sales tax holiday is from August 7 to 9, 2020. During the holiday, there's no sales tax on purchases of clothing priced at $75 or less, school supplies priced at $20 or less, and school instructional materials priced at $20 or less. Clothing accessories, protective equipment, sewing equipment and supplies, sports or recreational equipment, belt buckles, costume masks, patches and emblems, and items used in a trade or business are not exempt. The Ohio Department of Taxation has more information about what is or isn't exempt during the sales tax holiday on the FAQ section of its website.

• State sales tax rate: 4.5%
• Average combined state and local sales tax rate: 8.95%
• Sales tax holiday: Back-to-School
• Dates: August 7 to 9, 2020
• Go to Oklahoma's Full State Profile

During Oklahoma's back-to-school sales tax holiday, sales of clothing or footwear are tax-free if the sales price is less than $100. The sales tax exemption doesn't apply to the sale of accessories (e.g., jewelry, handbags, luggage, umbrellas, wallets, watches, and other similar items), special clothing or footwear primarily designed for athletic activity, or to the rental of clothing or footwear. A nonexclusive list of "clothing" that is exempt from sales tax during the holiday is on the Oklahoma Tax Commission's website. This year's sales tax holiday is from August 7 to 9, 2020.

• State sales tax rate: 6%
• Average combined state and local sales tax rate: 7.46%
• Sales tax holiday: Back-to-School
• Dates: August 7 to 9, 2020
• Go to South Carolina's Full State Profile

This year, South Carolina's back-to-school sales tax holiday starts on August 7 and ends on August 9, 2020. On those three days, shoppers can skip paying sales tax on purchases of clothing, footwear, accessories, school supplies, computers, software, printers, and certain bed and bath supplies. The exemption does not, however, apply to sales of jewelry, cosmetics, eyewear, wallets, watches, furniture, or any item to be used in a trade or business. The rental of clothing or footwear is taxable, too. Additional examples of items that are both exempt and taxable items during the holiday are posted on the South Carolina Department of Revenue's website.

• State sales tax rate: 7%
• Average combined state and local sales tax rate: 9.55%
• First sales tax holiday: Back-to-School
• Dates of first holiday: July 31 to August 2, 2020
• Second sales tax holiday: Restaurants
• Dates of second holiday: August 7 to 9, 2020
• Go to Tennessee's Full State Profile

Tennessee has the highest average combined state and local sales tax rate in the country at 9.53%. But back-to-school shoppers can dodge that extra expense on selected items if they shop during the state's sales tax holiday, which runs from July 31 to August 2, 2020. Clothing, footwear, and school supplies (including art supplies) priced at or below $200 are tax-free during the holiday, as are electronic devices costing $3,000 or less. While clothing qualifies for the exemption, clothing accessories, protective equipment, and sport or recreational equipment do not. The exemption also doesn't apply to computer software, school instructional materials, household appliances, items used in a trade or business, or to items that are rented. A more complete list of exempt items can be found on the Tennessee Department of Revenue website.

There's also a new sales tax holiday in 2020 for food and drinks sold by restaurants. This is a one-time holiday starting on August 7 and ending on August 9, 2020. Only restaurants with a seating capacity of at least 40 patrons qualify for the holiday. "Limited service restaurants" – establishments that sell alcoholic beverages and food, with a majority of revenue coming from alcohol – also qualify if they have a seating capacity of at least 40.

• State sales tax rate: 6.25%
• Average combined state and local sales tax rate: 8.19%
• First sales tax holiday: Emergency Preparation Supplies
• Dates of first holiday: April 25 to 27, 2020
• Second sales tax holiday: Energy-Efficient Appliances
• Dates of second holiday: May 23 to 25, 2020
• Third sales tax holiday: Water-Saving Products
• Dates of third holiday: May 23 to 25, 2020
• Fourth sales tax holiday: Back-to-School
• Dates of fourth holiday: August 7 to 9, 2020
• Go to Texas' Full State Profile

Maybe it's just Texas being Texas, but the Lone Star State has more sales tax holidays than any other state – four of them are on the books for 2020. The first holiday, which is for emergency preparation supplies, goes from April 25 to 27, 2020. During the holiday, you won't pay sales tax on purchases of certain supplies needed to cope with natural disasters like hurricanes, flash floods, and wildfires. There are price limits on the supplies that qualify for the holiday tax exemption. For example, portable generators must cost less than $3,000, and emergency ladders and hurricane shutters must be priced below $300. The price limit is $75 for things like axes, batteries, can openers (nonelectric), carbon monoxide detectors, coolers and ice chests for food storage, fire extinguishers, first aid kits, flashlights and other portable light sources, fuel containers, ground anchor systems and tie-down kits, hatchets, ice products, mobile phone batteries and chargers, plastic sheeting, radios, smoke detectors, and tarps.

Next up is the state's sales tax holiday for energy-efficient products, which runs through Memorial Day weekend (May 23 to 25, 2020). During the tax-free weekend, you can skip taxes on the purchase, rental, or lease of Energy Star-labeled air conditioners with a sales price of $6,000 or less, refrigerators with a sales price of $2,000 or less, ceiling fans, incandescent and fluorescent light bulbs, clothes washers, dishwashers, dehumidifiers, and programmable thermostats. (Thermostats must receive Energy STAR labels before 2010.) No sales tax exemption is available for water heaters, clothes dryers, freezers, stoves, attic fans, heat pumps, wine refrigerators, kegerators, or beverage chillers.

Also during the Memorial Day weekend (May 23 to 25, 2020), Texans can avoid sales tax on purchases of water-saving products that result in water conservation or groundwater retention, water table recharge, or a decrease in ambient air temperature that limits water evaporation. Examples of products that qualify for the sales tax exemption include soaker or drip-irrigation hoses; moisture controls for a sprinkler or irrigation system; mulch; rain barrels or other rain/moisture collection systems; permeable ground cover surfaces that allows water to reach underground basins, aquifers or water collection points; grasses, plants, shrubs or trees; and water-saving surfactants designed to help water penetrate the soil.

Texas wraps up its 2020 sales tax holiday schedule with a tax-free weekend for back-to-school shopping from August 7 to 9. During this annual holiday, you can buy most clothing, footwear, school supplies, and backpacks without having to pay sales tax as long as the item purchased is sold for less than $100. The Texas Comptroller's office has lists of exempt and taxable items for clothing, footwear and other items and for school supplies on its website.

• State sales tax rate: 5.3% (includes mandatory 1% local tax)
• Average combined state and local sales tax rate: 5.65%
• Sales tax holiday: Multiple Product Categories
• Dates: August 7 to 9, 2020
• Go to Virginia's Full State Profile

Virginia only has one sales tax holiday, but they pack a lot into one tax-free weekend. During the three-day period, you can buy qualifying school supplies, clothing, footwear, hurricane and emergency preparedness items, energy-efficient appliances, and water-saving products without paying sales tax. However, for purchases to be tax-free, the items sold cannot exceed certain price limits. For instance, school supplies can't be sold for more than $20, and clothing and footwear must be priced at $100 or less. For hurricane and emergency preparedness products, portable generators can't cost more than $1,000, gas-powered chainsaws must be sold for $350 or less, chainsaw accessories must be priced at or below $60, and other hurricane preparedness items can't be sold for more than $60. Energy-efficient (Energy Star) and water-saving (WaterSense) products can't be priced above $2,500. The Virginia Department of Taxation has lists of exempt and taxable school supplies, clothing, and footwear; hurricane and emergency preparedness products; and Energy Star and WaterSense products on its website (click on links to view lists).