2025 Year in Review: Impactful Changes for Next Gen Planning

If 2025 taught us anything, it’s that change is constant. Families with young children already have plenty to manage, and changes to the tax code or student loan limits are low on the list (or not on the list at all).

That’s why this review exists: to highlight what changed in 2025 and why it matters for Millennials, Gen Z, and families raising kids today. Rules change often, and these updates can have a big impact on budget, savings, wealth transfer, and long-term plans.

Child Tax Credit Gets a Boost

One of the most family-friendly updates was the increase in the Child Tax Credit. For 2025, the credit rose to $2,200 per child under age 17, up from $2,000 in 2024, with a refundable portion of $1,700. This enhancement provides meaningful relief for households managing rising costs of childcare and everyday expenses.

Student Loan Landscape Reshaped

Perhaps the most dramatic changes came from the One Big Beautiful Bill Act, signed into law mid-year. Here’s what shifted:

• Income-Based Repayment (IBR) Expansion: The old requirement to prove “partial financial hardship” was eliminated, making IBR accessible to nearly all federal borrowers. Monthly payments remain tied to discretionary income, typically capped at 10–15%, with forgiveness after 20–25 years.
• Repayment Options Consolidated: Plans like SAVE, PAYE, and ICR will be phased out by 2028, leaving borrowers with two main options: IBR and the new Repayment Assistance Plan (RAP), which offers lower monthly payments but extends forgiveness to 30 years.
• Borrowing Caps Introduced: Starting July 2026, graduate students face annual borrowing limits of $20,500 (up to $100,000 total), while professional degree seekers can borrow $50,000 per year (up to $200,000 total). The popular Grad PLUS program, which allowed borrowing up to full cost of attendance, was eliminated.

These changes aim to curb tuition inflation but could push some students toward private loans or alter degree choices—a major consideration for younger families planning education costs.

Employer Student Loan Repayment Assistance

Employers can now contribute up to $5,250 per year toward an employee’s student loans without it counting as taxable income. This provision encourages companies to help employees tackle debt while balancing family expenses—a valuable benefit for Millennials and Gen Z professionals managing both career and childcare costs.

New “Trump Accounts” for Kids

A standout addition in 2025 was the creation of Trump Accounts, tax-advantaged savings vehicles for children born between 2025 and 2028. Each account starts with a $1,000 government contribution, and parents can add up to $5,000 annually, with employers contributing up to $2,500. Funds grow tax-deferred, creating a powerful early savings tool for education or other future needs. More to come on Trump Accounts, including how to open and fund them, in 2026.

529 Plan Expansion

Education savings got another boost as 529 plans were expanded to cover a broader range of qualified expenses, giving families more flexibility in planning for their children’s future.

Annual Gift Exclusion Rises

For families focused on wealth transfer, the annual gift tax exclusion increased to $19,000 per recipient (up from $18,000 in 2024). Married couples can gift $38,000 per person through gift-splitting, offering a tax-efficient way to support children or grandchildren.

Why Financial Planning Matters More Than Ever

The pace and scope of these changes highlight why proactive financial planning is critical. Tax credits, savings vehicles, and borrowing rules can shift from year to year, impacting everything from monthly budgets to long-term wealth strategies. For younger families navigating all the above, staying informed is critical—and with the help of a financial planner, you can stay apprised of relevant changes from 2025 and beyond.

Sources

• Child Tax Credit | Internal Revenue Service
• Newsweek – Student Loan Update
• Are you a student loan borrower? Here's how the One Big Beautiful Bill Act could affect you. - CBS News
• Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations | Internal Revenue Service
• How the Big Beautiful Bill Expands 529 Plans, ABLE Accounts & Trump Accounts
• Frequently asked questions on gift taxes | Internal Revenue Service
  
  

Disclosures:

Apella Capital, LLC (“Apella”), DBA Apella Wealth, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Apella Wealth provides this communication as a matter of general information. Any data or statistics quoted are from sources believed to be reliable but cannot be guaranteed or warranted.