How the 2025 Tax Changes Could Impact Your Decision to File Bankruptcy
Big changes are happening in Washington, and whether or not you follow politics, they could have a real effect on your day-to-day finances. If you’re considering filing bankruptcy, you should know how these new laws might affect you.
One of the biggest developments this year is the passage of a new federal budget and tax bill, which includes a mix of tax cuts and spending changes. If you’re already living paycheck to paycheck or struggling with debt, these changes might push you to take a closer look at bankruptcy as an option.
As a Memphis bankruptcy lawyer, let me break down what’s happening and how it could impact your financial decisions.
What’s in the New Tax Law?
The 2025 budget bill comes with several new tax provisions. Some of the highlights include:
- Permanently lowered federal income tax rates for higher earners
- Extended tax credits for families with dependents
- Changes to small business deductions and self-employment rules
- Budget cuts to many federal programs, including Medicaid and food assistance
Some of these changes may offer a boost for the economy. But for individuals and families already under financial strain, these adjustments could have real consequences.
It may especially impact you if you rely on certain public programs or have unpredictable income.
What Budget Cuts Could Mean for You
Some of the most significant changes involve cuts to safety-net programs like SNAP (food assistance), housing aid, and Medicaid. If you depend on these programs to help cover basic needs, losing access can create immediate pressure on your budget.
For example:
- If you have medical bills but lose Medicaid coverage, your out-of-pocket expenses could spike.
- If rent assistance is reduced, you might struggle to pay for housing.
- If food costs rise and SNAP benefits shrink, you might rely more on credit cards or BNPL services just to cover groceries.
When basic needs become unaffordable, debt can snowball quickly. A lot of people turn to credit cards and other debt to cover the losses.
When that debt skyrockets, bankruptcy may be the only way to regain control and protect your home, your car, your paycheck, and your peace of mind.
How Tax Changes Affect Bankruptcy Decisions
Even if you’re not directly impacted by public program cuts, the tax law changes could still influence your finances:
- Fewer deductions for self-employed workers may mean a higher tax bill in 2025
- Lower tax refunds could affect your ability to catch up on debt
- Shifts in tax brackets might push you into a higher monthly budget squeeze
These financial pressures can quietly build up and leave you stuck in a cycle of missed payments, late fees, and creditor calls.
Should You File for Bankruptcy Now?
If these new policies have changed your financial picture – or if you’re worried they might – you’re not alone. A lot of hardworking people across Memphis are facing tough choices and have been for a long time.
If the situation gets out of control, bankruptcy can be a powerful tool. It helps you wipe out unsecured debts like credit cards, medical bills, and personal loans. It stops foreclosure, repossession, and wage garnishment in their tracks.
And as I’ve seen in my 40 years helping thousands of people get out of debt in Memphis, it offers a real chance for a fresh start and a better financial future.
The truth is, bankruptcy laws are designed to give people a fighting chance when the system isn’t working for them anymore. And with the economic landscape shifting, it may be necessary for you to explore that option.
Considering Filing Bankruptcy? Let’s Talk About Your Options
You don’t have to wait until you’re drowning in bills or facing legal action. If you’re unsure how the 2025 tax and budget changes affect you, I can help you figure out your best next step.
We offer a free consultation with no strings attached to help you understand whether you might qualify for bankruptcy and what to expect from the process.
When you meet with our team, we keep in mind your personal situation alongside all the national trends and new laws. We help you think through your next steps and your future goals. And we make your success our priority.
That means you’ll never feel pressured into bankruptcy that you don’t need or want. And it also means we look out for the things you want to protect the most.
Call 901-327-2100 today or contact us online for a free consultation. I’ll walk you through your options and help you decide whether bankruptcy could be the fresh start you need.