Are you a U.S. citizen living in the U.K. and wondering how the latest U.S. tax updates might affect you? A new bill making its way through Congress could lock in some major tax changes for the years ahead — and if it passes, your 2025 tax return might look a little different.
Here are some of the key updates that matter to everyday Americans abroad:
🌍 Good News for Families and Standard Filers
Standard deduction stays high: The bigger standard deduction introduced in 2017 will likely become permanent. This is good news if you don’t itemize — which many expats don’t.
Child tax credit boost: The credit could rise to $2,500 per child for 2025–2028. After that, it would settle at $2,000 (still higher than it used to be), and adjust for inflation.
👩🦳 New Deductions for Seniors and Workers
“Senior bonus” deduction: If you're 65 or older, you could get a new $4,000 deduction (phasing out for higher incomes).
No tax on overtime or tips: Working extra hours or earning tips? You may be able to deduct that income. This applies even if you claim the standard deduction.
🚗, 💰, and 🎓 Extras Worth Noting
Car loan interest: A temporary deduction for interest on U.S.-made vehicle loans could kick in (up to $10,000/year).
Student loan relief: Some tax-free student loan forgiveness rules could be made permanent — especially for loans discharged due to death or disability.
529 plan expansion: U.S. education savings plans might start covering homeschooling and even some job training costs.
🔎 What About Expats?
This bill doesn’t directly overhaul expat tax rules, but it does affect income thresholds, credits, and deductions that apply globally. For example, if you qualify for the Foreign Earned Income Exclusion (FEIE) or file Form 1116 for the Foreign Tax Credit, changes to income brackets and deductions could shift your tax balance.
🧾 Still Required to File?
Yes — even from the U.K., U.S. citizens must file annual tax returns (and possibly FBAR or FATCA forms). The IRS never forgets, and it pays to stay compliant — or get caught up if you're behind.
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DISCLOSURE: Information provided on this website is for guidance purposes only and should not be construed or relied upon as formal tax, legal or financial advice.