U.S. Personal Tax Guide: From Filing Status to AGI to Itemizing

2025 U.S. Personal Tax Guide: From Filing Status to AGI to Itemizing

Numbers like brackets and the standard deduction are indexed annually; 2025 amounts are noted below and link to the IRS for verification.

1) Choose the Correct Filing Status (First, Always)

Your filing status (Single, MFJ, MFS, Head of Household, Qualifying Surviving Spouse) drives your standard deduction, rates, and credit eligibility. It’s determined by your marital status on December 31 and whether you support a qualifying person for HOH/QSS. See the IRS filing-status explainer and Publication 501 for the rules and examples. IRS+2IRS+2

2025 standard deduction (indexed annually)

Single / MFS: $15,000
Married Filing Jointly: $30,000
Head of Household: $22,500
(Plus the existing “additional standard deduction” for age 65+/blind, and a new 2025–2028 senior bonus deduction of $6,000 single / $12,000 MFJ under the One Big Beautiful Bill Act—separate from the standard deduction.) IRS+1

2025 tax brackets also adjust for inflation. Example: the 32% bracket starts at $197,300 single ($394,600 MFJ). IRS

2) Understand Gross Income (What’s Taxable vs. Not)

“Gross income” generally means all income from whatever source—wages, interest/dividends, business income, rents, etc.—unless excluded by law. IRS Publication 525 lists what’s taxable and what’s not (e.g., many employer fringe benefits, certain insurance proceeds, disaster payments). IRS+1

Side-hustle or self-employment?

Net earnings of $400 or more trigger self-employment tax and a filing requirement (Schedule SE). Plan for both income tax and SE tax on that profit. IRS

Texas note: Texas has no state income tax; your business/side-hustle income still counts for federal tax and SE tax. (Local business rules may still apply.)

3) Above-the-Line Deductions → Adjusted Gross Income (AGI)

You reduce gross income with “adjustments to income” on Schedule 1—these are often called above-the-line deductions. Common ones include:

Educator expenses
HSA deduction
Traditional IRA deduction (subject to limits)
Student loan interest
50% of self-employment tax, self-employed health insurance, and SEP/SIMPLE contributions
Alimony paid (pre-2019 instruments), penalty on early savings, eligible moving expenses for active-duty military, and other line-items shown on Schedule 1. IRS+1

Your AGI is the result after these adjustments. Many credits/deductions (medical expense threshold, education credits, etc.) are tied to AGI/MAGI—so managing AGI is powerful.

4) Standard Deduction vs. Itemized Deductions (Schedule A)

You can claim the larger of:

the standard deduction (above), or
itemized deductions on Schedule A, such as:

Medical & dental expenses over 7.5% of AGI
State and local taxes (SALT) capped at $10,000 total ($5,000 MFS)
Mortgage interest (subject to limits)
Charitable contributions (with substantiation rules)
Certain casualty/theft losses
(See Schedule A instructions for specifics.) IRS+1

Texas angle: With no state income tax, Texans often elect to deduct state general sales tax instead of state income tax on Schedule A, still subject to the $10,000 SALT cap. The IRS provides optional sales-tax tables and a calculator. IRS

5) “Below-the-Line” Items After Taxable Income

A reminder that some items (e.g., the Qualified Business Income deduction—up to 20% for eligible pass-through income) are not on Schedule A but reduce taxable income after you’ve chosen standard vs. itemized (Form 8995/8995-A). Thresholds and wage/UBIA limits apply. IRS+1

Quick Tax-Planning Plays for 2025

Pick the optimal filing status. If more than one could apply, compare outcomes (e.g., HOH vs. Single; QSS if eligible). IRS
Manage AGI. Fund HSAs, pre-tax retirement, or deductible IRAs to stay under key credit cliffs (education credits, child/dependent care rate, etc.). Use Schedule 1 strategically. IRS
Itemize intentionally. In Texas, consider the sales-tax election on Schedule A and bunch medical/charitable expenses into one year to clear thresholds/caps. IRS
Plan self-employment cash flow. If you expect $400+ of net earnings, set aside for SE tax and make quarterly estimates; remember you can deduct ½ of SE tax above the line. IRS+1
Use updated 2025 numbers. Brackets, standard deduction, HSA/FSA limits, EITC, AMT and more are inflation-adjusted—model with current tables. IRS
Seniors (65+): Factor in the new 2025–2028 senior bonus deduction in addition to the regular extra standard deduction—can materially shift whether you itemize. IRS

Key IRS Sources

2025 inflation adjustments: standard deduction, brackets, credits. IRS
Filing status & who should file: Publication 501 + interactive tool. IRS+1
What’s taxable vs. not: Publication 525. IRS
Adjustments to income (AGI): Schedule 1 + 1040 hub. IRS+1
Itemizing rules & SALT cap: Schedule A instructions. IRS
Self-employment $400 threshold: Topic 554 / Schedule SE. IRS
QBI deduction overview: Form 8995 / IRS newsroom. IRS+1

Want a personalized 2025 plan (federal focus, Texas examples as needed)? Finpilot360 can map your status, AGI levers, and itemization strategy in a single session.