Tax Relief for Holiday Bonuses: Up to $2,500 Excluded from Income.
This law creates a new tax exclusion for holiday and year-end bonuses, allowing workers to keep more of their bonus money. Individuals can exclude up to $2,500 annually from their gross income if the bonus is paid in November, December, or January. This change applies starting November 1, 2025.
Key points
Holiday or year-end bonuses up to $2,500 per year are excluded from federal income tax calculations.
The exclusion applies specifically to bonuses paid by an employer during November, December, or January.
The $2,500 limit will be adjusted for inflation starting with the 2027 tax year.
Status:
Introduced
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