Inflation may have cooled in 2024, but the prices of many goods and services remain high. There's some good news on the horizon. Employer matches, tax credits, and state rebates could potentially lead to more money in your pocket next year. Here's a look at free money—and employer benefits that are like free money—that you could be entitled to in 2025.
1. Employer benefits
401(k) or 403(b) matches. If you have one of these retirement accounts through work, your employer might match your contributions as part of your compensation package. That match is like free money. The amount they'll match varies by organization, but it could be 50 cents or a dollar for each dollar you contribute, up to a certain percentage of your salary. If you're able, contribute at least enough to your plan to take advantage of the full match. Whatever your employer adds to your retirement savings could mean more money for you in retirement.
Other pre-tax accounts. Do you have access to a flexible spending account (FSA) or health savings account (HSA)? These allow you to set aside tax-free money to pay for health care costs. Any withdrawals are also tax-free, as long as you use them to cover qualified medical expenses.1 This can help you save for health-related expenses—such as doctor visits, medication, and more—that you'd already be paying for, but you get to save on taxes when paying for them.
Similarly, if you commute to your workplace, you may be able to take advantage of a commuter benefit that allows you to use pre-tax dollars for eligible transit and parking expenses. Because you don't have to pay taxes first, and then use the remaining dollars to pay for the expenses, it's like getting a discount to buy train and bus tickets and parking passes.
Reimbursements. Your employer might offer to pay you back for a portion of wellness and education expenses, such as gym memberships and tuition costs. Check out what your company reimburses. If that includes expenses you'd incur anyway, consider taking advantage.
2. Earth-friendly federal tax credits
As part of the Inflation Reduction Act, which began rolling out in 2023, tax credits are available to people who have made their homes and vehicles more energy efficient.
Energy Efficient Home Improvement Credit.You can get a 30% credit on qualified expenses on energy-efficient improvements made in 2024. (It’s nonrefundable, which means if you owe less in taxes than the credit amount, you don’t get any portion as a refund. You also can't carry over any unused portion of the credit to future tax years.) These improvements include exterior doors, windows, and skylights that meet Energy Star requirements, as well as insulation and air-sealing materials or systems that meet International Energy Conservation Code standards. Other qualified expenses may include central air conditioners, heat pumps, and even home energy audits. The tax credit can be claimed for up to $3,200, but there are maximums on the types of improvements—for example, $1,200 for energy property costs with limits on exterior doors ($250 for one and $500 in total), windows ($600), and home energy audits ($150). The limit for heat pumps and biomass equipment tops out at $2,000.
Residential Clean Energy Credit. If you’ve made energy improvements to your main home—whether you own or rent—you may qualify for this credit. It equals 30% of the costs of new, clean energy equipment installed in 2024. Qualified expenses include solar electric panels, solar water heaters, wind turbines, and more. Unlike the Energy Efficient Home Improvement Credit, there are no limits on the credit for most purchases, and any unused portion of this nonrefundable credit can be carried forward to reduce tax you may owe in future years.
New Clean Vehicles Credit. If you bought a new plug-in electric or fuel cell vehicle in 2024, you might be eligible for a nonrefundable credit of up to $7,500. The exact amount depends on when you received the car, its manufacturer suggested retail price (MSRP), its battery component, your modified adjusted gross income (MAGI), and more. Income limits are $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for other filers. This credit was modified in 2023 such that a buyer can apply the credit at time of purchase, as opposed to waiting until filing their tax return.
If you bought a used EV or fuel cell vehicle, you could qualify for a credit of 30% of the sale price, up to $4,000. However, eligibility is restricted as lower MAGI limits apply.
3. Other federal tax credits
While the following credits have been around for a while, some of them have increased, which could mean a lower tax bill—and in some cases a higher refund.
Earned Income Tax Credit. If you have low to moderate taxable income from a company, your own small business, or running a farm, and your investment income totals no more than $11,600, you may be eligible for a credit based on the number of qualifying children you have. For 2024, you can claim a maximum of $7,830 for three or more children provided you're a single filer making $59,899 or less, or a joint filer with an AGI no more than $66,819. You must be at least age 25 but under age 65, among other criteria, to qualify for the credit.
Child Tax Credit allows you to claim a $2,000 nonrefundable credit per qualifying dependent child who’s under 17 by the end of 2024 if your MAGI is up to $400,000 for married couples filing jointly or up to $200,000 for other filers. (Parents and guardians with higher MAGIs might qualify for a partial credit.) This is unchanged from 2023. If you can’t claim the full Child Tax Credit because the amount is more than the taxes you owe, you might be able to claim the Additional Child Tax Credit, which is partially refundable. So even if you don't have a tax bill, you could get a refund up to $1,700, which is $100 more than for 2023. Consider consulting with a tax professional to see if you qualify.
Credit for Other Dependents. If you have dependents who don't qualify for the Child Tax Credit, you may still be able to claim up to $500 for each one who's 17 or older if your MAGI is up to $400,000 for married couples filing jointly or up to $200,000 for other filers, among other criteria.
Child and Dependent Care Credit. This is intended to cover childcare expenses, or the care of a spouse or parent who isn't mentally or physically able to care for themselves, while you work or look for work. The credit is up to $1,050 for one child or dependent, or up to $2,100 for 2 or more children or dependents. These amounts are unchanged from 2023.
Lifetime Learning Credit .You can claim up to $2,000 on qualified tuition and education-related expenses paid toward undergraduate, graduate, and professional degree courses, including skill development courses. Individuals can't make more than $90,000, and the cap is $180,000 for joint filers. This is a nonrefundable credit.
American Opportunity Tax Credit (AOTC). In one of your first 4 years of higher ed? Attending at least half-time and pursuing a degree or other qualified credential? You could get up to $2,500 off your tax bill—or a refund up to $1,000—if your MAGI is $80,000 or less (or $160,000 or less if you're married filing jointly). You could qualify for a portion of the credit if you make over $80,000 but less than $90,000 (or over $160,000 but less than $180,000 if you're married filing jointly). Note: You can't claim the AOTC in the same year as the Lifetime Learning Credit for the same student.
Adoption Credit . You can get up to $16,810 in adoption costs per child in 2024, up from $15,950 in 2023. This credit decreases at certain income levels, starting at $252,150 MAGI. People are not eligible if their MAGI is $292,150 or more. It's a nonrefundable credit.
Saver's Credit . Contribute to an IRA or retirement plan? You may be able to receive a credit worth up to 50% of your 2024 IRA contribution or retirement savings for the first $4,000 you contribute if you're married filing jointly or the first $2,000 for all others. The exact percentage depends on your filing status and income. Other requirements: You must be over 18, you can't have been a student in 2024, and no one can claim you as a dependent. Adjusted gross income limits to receive any portion of the credit: $76,500 or less, if you're married filing jointly, $57,375 or less, if you're filing as a head of household, or $38,250 or less for all other filers. Check out the percentage you may qualify for.
4. State payments and tax credits
While most states have stopped sending economic stimulus checks to taxpayers, some groups in a few states may be eligible for other types of refunds or credits. It’s also worth knowing that the federal government has allocated $4.3 billion in grants to state energy offices partially for Home Efficiency Rebates programs, so your state might offer additional rebates in 2025 when you file your 2024 taxes.
Colorado. The Taxpayer's Bill of Rights (TABOR) Amendment limits the amount of revenue the state can retain and spend, requiring anything over that amount be returned to taxpayers. For 2024, tax filers, the CO Department of Revenue will reduce income tax from 4.40% to 4.25%. Additionally, filers who earned up to $53,000 in 2024 are set to receive $177 in 2025, and the highest refund of $565 is expected to go to those who make $302,001 and over. Refund amounts are doubled for joint filers. People will receive their TABOR refund after they file their 2024 tax returns.
Maine. As one of 12 states with its own child tax credit program, Maine's Dependent Exemption Tax Credit provides $300 apiece for taxpayers' qualifying dependents. Beginning in 2024, the credit is fully refundable and adjusted for inflation.
Massachusetts. The Child and Family Tax Credit allows $440 per eligible individual for tax year 2024. That's up from $310 from the previous year. Who's eligible? Children under 13, disabled dependents or spouse, and dependents age 65 and over. Massachusetts also has its own EITC equal to 40% of the federal credit.
Washington. Similar to the federal EITC, the Working Families Tax Credit will provide low-to-moderate income Washington residents with payments up to $1,255. The amount you qualify for depends on your income and the number of children you can claim, and it’s a refund of retail sales or use tax (which you might have paid instead of sales tax on certain items or services).