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Happy New Year! This time of year allows us at LaBarge Financial to reflect on last year. We grew in 2025 and are thrilled to continue helping guide more individuals in Severna Park on their journey to retirement. As we reflect, we are filled with gratitude to this community for trusting us.
Reflecting and learning lessons is important in financial planning. When it comes to our finances, we’re also learning and adjusting client planning strategies. As we look back at last year, one theme stands out: new tax changes could impact your finances now. We want to keep you informed about these changes and help you understand their impact on your finances.
The One Big Beautiful Bill Act — a federal tax package passed last summer — brings significant changes that could hit your wallet in the 2025 taxable year. Despite misconceptions, taxes on Social Security haven’t gone away, but there is a new tax deduction that gives older people additional tax relief.
Starting in this taxable year, seniors older than 65 with a gross income under $75,000, or $150,000 for joint filers, are eligible for a $6,000 tax deduction, or $12,000 for joint filers. Those who exceed the limit may still be eligible but for a smaller deduction.
In addition to the senior deduction, the state and local tax (SALT) deduction increased from $10,000 to $40,000. This allows you to deduct your state tax expenses from your federal taxes if you itemize deductions. Nearly 20% of Marylanders used the SALT deduction, second only to Washington, D.C., which primarily benefits high-income earners to avoid double taxation.
The act included many other changes, including extending the Tax Cuts and Jobs Act from 2025, which means federal tax rates remain steady in 2025. Tax brackets had a slight inflation adjustment of just under 3% for income from 2024.
It’s important to understand your tax bracket, even if rates didn’t change significantly, because your income may have increased. If you’re not sure, I encourage you to double-check and consider consulting with a tax professional to guide you through the process.
Beyond federal updates, Maryland residents will see notable state-level adjustments. Due to a budget shortfall, a new budget bill increased personal income tax rates and adjusted standard deductions.
Maryland has added two additional tax brackets for state-level taxes, with a 6.25% bracket for taxable income between $500,001 and $1 million, or $600,000 and $1.2 million for joint filers, and 6.5% for taxable income over $1 million, or $1.2 million for joint filers.
In Maryland specifically, the maximum standard deduction has increased from $2,800 to $3,350, or from $5,600 to $6,700 for joint filers.
There is a lot to unpack when it comes to taxes, but that’s why it’s important to involve a professional. If you were caught off guard by these changes last year, consider adjusting your strategy in 2026. Without a year-round strategy, you may unknowingly push yourself into a higher bracket, miss deductions, or make inefficient retirement withdrawals.
While a tax professional can guide you through the filing process, a financial professional takes a comprehensive look at your financial picture to understand how each aspect impacts your taxes. We’re entering 2026 with a fresh mindset and an opportunity to try something new. Consider working with a financial advisor to help understand tax strategies for your overall financial plan.
Jason LaBarge, financial advisor and president of LaBarge Financial
7 Riggs Avenue, Severna Park, MD 21146
443-647-4321
www.labargefinancial.com
Securities offered only by duly registered individuals through Madison Avenue Securities LLC (MAS), member FINRA/SIPC. Investment advisory products and services made available through AE Wealth Management LLC (AEWM), a registered investment advisor. MAS and LaBarge Financial are not affiliated entities. LaBarge Financial is not affiliated with the U.S. government or any government agency. Neither the firm nor its representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.
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