The IRS has released the inflation-adjusted tax brackets, deductions, and contribution limits for 2025. These changes will impact tax planning for the upcoming year—but remember, they do not affect your 2024 tax return.
Standard Deduction Increases for 2025
Taxpayers will see a bump in the standard deduction, reducing taxable income:
- Married Filing Jointly: $30,000
- Single or Married Filing Separately: $15,000
- Head of Household: $22,500
2025 Tax Brackets & Rates
Here’s how federal income tax brackets shape up for 2025:
| Tax Rate | Single Filers | Married Filing Jointly |
|---|---|---|
| 37% | Over $626,350 | Over $751,600 |
| 35% | Over $250,525 | Over $501,050 |
| 32% | Over $197,300 | Over $394,600 |
| 24% | Over $103,350 | Over $206,700 |
| 22% | Over $48,475 | Over $96,950 |
| 12% | Over $11,925 | Over $23,850 |
| 10% | $11,925 or less | $23,850 or less |
Retirement Contribution Limits
IRA Contributions:
💰 $7,000 max (unchanged from 2024)
💰 $8,000 for those 50+ (catch-up contribution)
401(k) Contributions:
💰 $23,500 employee max
💰 $8,000 additional catch-up for those 50+
Alternative Minimum Tax (AMT) Adjustments
The AMT exemption amounts for 2025:
- Single/Head of Household: $88,100 (phases out at $626,350)
- Married Filing Jointly: $137,000 (phases out at $1,252,700)
Earned Income Tax Credit (EITC) for 2025
For families with three or more qualifying children, the max EITC is now $8,046.
Pre-Tax Benefit Adjustments
-
Qualified Transportation & Parking Benefits: 🚗 $325 per month
-
Medical Savings Accounts (MSA):
- Self-Only Coverage: Deductibles between $2,850 and $4,300, max out-of-pocket $5,700
- Family Coverage: Deductibles between $5,700 and $8,550, max out-of-pocket $10,500
-
Flexible Spending Accounts (FSA):
- Contribution limit: 💳 $3,300 (up from $3,050 in 2024)
- Max carryover: 🔄 $660 (up from $640 in 2024)
-
Health Savings Accounts (HSA):
- Individual Coverage: $4,300 max contribution, min deductible $1,650, max out-of-pocket $8,300
- Family Coverage: $8,550 max contribution, min deductible $3,300, max out-of-pocket $16,600
- Catch-Up (55+): Extra $1,000
Other Key Tax Changes for 2025
- Foreign Earned Income Exclusion: 🌍 Now $130,000 (up from $126,500 in 2024)
- Estate Tax Exclusion: 💼 Increased to $13,990,000 (up from $13,610,000)
- Gift Tax Annual Exclusion: 🎁 Increased to $19,000 (up from $18,000)
What’s Next?
These adjustments could impact your tax planning strategy for 2025. Whether you’re maximizing retirement contributions, optimizing deductions, or considering estate planning, staying informed can help you keep more of your money.
Need guidance? Consult with a tax professional at Accavallo and Company LL to make the most of these updates!
