Mid-Year Tax Planning Guide 2025: Why Planning Beats Panic

As we approach the second half of 2025, the importance of tax planning for small to middle-class families has never been clearer. Recent legislative changes, inflation adjustments, and IRS enforcement trends underscore the value of early, strategic action. At JCox CPAs & Advisors, P.C., we believe proactive tax planning should be the norm, not the exception.

Why Be Proactive With Tax Planning?

Many taxpayers are familiar with tax preparation: the annual ritual of entering figures into software or handing paperwork to a preparer, then hoping for a refund or bracing for a bill. This process, while necessary, is reactive.

Tax planning is different. It's forward-looking. Rather than waiting until the end of the year, tax planning involves consistently evaluating your income, deductions, and credits throughout the year to ensure you're making smart decisions along the way. Whether you explore strategies on your own or work with a qualified tax advisor, planning in advance reduces surprises, identifies savings, and improves overall financial health.

Exclusive Offer: Tax Return Review + Free Mid-Year Planning

Did you file your 2024 tax return yourself or through another provider? JCox CPAs & Advisors is offering:

• A detailed review of your 2024 tax return

• A 40% discount on any necessary amended return

• A complimentary mid-year 2025 tax planning session

We’ll help determine whether adjustments are needed and build a custom plan for the rest of the year, so you’re not caught off guard come filing season.

Key Legislative Changes and Relevant IRC Sections

1. Standard Deduction Increase – IRC §63(c)

The standard deduction for 2025 has increased to $30,000 for married couples filing jointly and $15,000 for single filers. This simplifies filing and reduces taxable income for many families, potentially eliminating the need to itemize deductions.

2. Updated Child Tax Credit – IRC §24

The Child Tax Credit has increased to $2,500 per qualifying child. However, income thresholds have been updated, and eligibility is now subject to tighter rules. A mid-year review helps determine whether you're maximizing your credit opportunities.

3. Raised SALT Deduction Cap – IRC §164(b)(6)

Taxpayers with adjusted gross income under $500,000 can now deduct up to $40,000 in state and local taxes. This may revive itemized deductions for those in high-tax states, especially when paired with mortgage interest or charitable contributions.

4. Tip and Overtime Income Relief – IRC §62(a)

New legislation now allows deductions for reported tip income and qualified overtime under above-the-line adjustments. This change benefits hourly and service industry workers who often face higher effective tax rates on variable income.

5. Estimated Payments and Withholding – IRC §6654 and §3402

Now is the time to review your W-4 or calculate estimated taxes to avoid underpayment penalties. Mid-year is ideal for making course corrections based on expected year-end income.

6. Retirement Planning Opportunities – IRC §219 and §414(v)

Contributions to IRAs and 401(k)s can reduce taxable income while securing your future. Catch-up contributions for taxpayers aged 50+ allow additional savings. Planning ahead helps ensure contribution deadlines aren't missed.

7. Business Owners: Optimize Now – IRC §179 and §199A

Self-employed individuals and pass-through entities should evaluate:

• Equipment purchases for IRC §179 deductions

• Compensation and qualified income for the 20% QBI deduction under IRC §199A

These choices can significantly reduce your overall tax bill, but require proper planning before year-end.

8. Estate and Gift Strategies – IRC §2503 and §2010

Annual gift exclusions remain at $18,000 per recipient. The elevated lifetime exemption under IRC §2010 remains available through 2025, but is set to sunset. Planning now ensures your wealth transfer strategy is optimized before potential changes take effect.

Final Thoughts: Plan With Purpose by Connecting With Us Today

Tax planning is not just about minimizing taxes—it’s about building financial resilience. The sooner you identify opportunities, the more leverage you have to act. Let’s make 2025 the year you lead your finances, not follow your filing.

Connect with JCox CPAs & Advisors today to get started with your custom mid-year strategy.

Schedule your meeting here

How Stepped-Up Basis Reduces Inheritance Taxes

When families pass down wealth, whether through real estate, investments, or business interests, few things are more important than understanding how taxes will apply. And here's the good news: the IRS gives heirs a major break through what's called the stepped-up basis rule.

At JCox CPAs & Advisors, we specialize in strategies that preserve your legacy and keep taxes in check. Let’s walk through what a stepped-up basis is, how it works, and why it could save your family thousands—maybe even hundreds of thousands—in capital gains tax.

What Is a Stepped-Up Basis?

Under IRC §1014, when you inherit an asset, the IRS allows you to "step up" the basis (i.e., the starting value used for calculating taxes) to the fair market value (FMV) on the date of death.

That means if your loved one bought a property for $200,000, worth $800,000 when they pass away, your new basis is $800,000. So, if you later sell it for $850,000, you only pay tax on the $50,000 gain, not the $650,000 gain.

This is huge for avoiding unnecessary capital gains tax.

Why It Matters Now More Than Ever

In 2025, the federal estate and gift tax exemption is set at $13.99 million (IRC §2010(c)). While that covers most estates, capital gains taxes still apply to many inherited assets when they’re sold.

Without proper planning, heirs can get hit hard.

A Real-World Example From JCox

Let’s look at how this works in action:

One of our long-time clients at JCox CPAs Advisors, P.C., purchased a commercial property in Grayson, GA, in 1999 for $350,000. By the time they passed away in 2024, the property had appreciated by $1.2 million.

The heir—his son—sold the property in 2026 for $1.35 million.

Thanks to the stepped-up basis, he only paid tax on the $150,000 gain ($1.35M - $1.2M), not the full $1 million gain from the original cost basis.
Result: He paid around $30,000 in capital gains tax instead of $200,000. That’s a $170,000 tax savings.

What Assets Qualify?

The stepped-up basis applies to a variety of inherited property, including:

• Real estate

• Stocks and mutual funds

• Business interests

• Art collectibles

• Bank and investment accounts

However, retirement accounts like IRAs or 401(k)s are excluded under IRC §1014(c). These are taxed as ordinary income to the beneficiary upon withdrawal.

What If the Asset Drops in Value?

Here’s another twist: if the inherited asset lost value before the date of death, the step-up works in your favor, too. The basis is adjusted downward to FMV, so if the value later rises and you sell, the gain is only calculated from that adjusted point.

That said, if it keeps falling, you might even have a capital loss, which can help offset gains from other investments.

Final Thoughts: Legacy Protection That’s Smart and Strategic

At JCox CPAs & Advisors, P.C., we believe your legacy should be passed down, not taxed away. Whether you’re updating your estate plan or navigating a recent inheritance, knowing how the stepped-up basis works can protect your wealth for the next generation.