2025 IRS Tax Inflation Adjustments: Key Changes to Know
Every year, the IRS adjusts tax rates and deductions to account for inflation, and for tax year 2025, there are several updates that could impact your tax planning. At TaxOnTrack, we’re here to help you understand how these changes affect you and your tax return. Below, we outline the most important changes for the 2025 tax year.
2025 Standard Deduction Increases
| Filing Status | 2025 Standard Deduction | Increase from 2024 |
|---|---|---|
| Single / Married Filing Separately | $ 15,000 | + $400 |
| Married Filing Jointly | $ 30,000 | + $800 |
| Head Of Household | $ 22,500 | + $600 |
These higher deductions will reduce the amount of your income that is subject to federal tax, potentially lowering your overall tax burden.
2025 Federal Income Tax Brackets
The tax brackets for 2025 are adjusted for inflation, ensuring that taxpayers won’t be pushed into a higher bracket due to cost-of-living increases. The following tables summarize the updated tax brackets for single filers and married couples filing jointly:
Single Filers:
| Tax rate | Income Bracket |
|---|---|
| 10% | $0 - $11,925 |
| 12% | $11,926 - $48,475 |
| 22% | $48,476 - $103,350 |
| 24% | $103,351 - $197,300 |
| 32% | $197,301 - $250,525 |
| 35% | $250,526 - $626,350 |
| 37% | Over $626,350 |
Married Filing Jointly:
| Tax rate | Income Bracket |
|---|---|
| 10% | $0 - $23,850 |
| 12% | $23,851 - $96,950 |
| 22% | $96,951 - $206,700 |
| 24% | $206,701 - $394,600 |
| 32% | $394,601 - $501,050 |
| 35% | $501,051 - $751,600 |
| 37% | Over $751,601 |
Other Key Adjustments for 2025
| Tax Item | 2025 Adjustment |
|---|---|
| Earned Income Tax Credit (EITC) | Maximum Credit for 3+ children: $8,046 (up from $7,830 in 2024) |
| Alternative Minimum Tax (AMT) Exemption |
Single filers: $88,100 (phases out at
$626,350) Married couples: $137,000 (phases out at $1,252,700) |
| 401(k) Contribution Limit | Annual limit: $23,500 |
| Health Flexible Spending Arrangement (FSA) | Maximum salary reduction contribution: $3,300 (up from $3,200) |
| Medical Savings Account (MSA) |
Self-only coverage deductible: $4,300 (up
from $2,850) Family coverage deductible: $8,550 (up from $5,700) |
| Foreign Earned Income Exclusion | $130,000 (up from $126,500) |
| Annual Gift Tax Exclusion | $19,000 (up from $18,000) |
| Adoption Credit | $17,280 (up from 16,810) |
Unchanged for 2025
| Unchanged for 2025 | |
|---|---|
| Personal Exemption | Stays at $0, continuing the elimination set by the Tax Cuts and Jobs Act of 2017 |
| Itemized Deductions | There is no limitation on itemized deductions for 2025, as with previous years since 2018 |
| Lifetime Learning Credit | The income phase-out remains at $80,000 for single filers and $160,000 for married couples filing jointly |
Need Help Understanding These Rates?
Not sure how these changes impact you? Reach out to TaxOnTrack for personalized guidance on how the 2025 IRS inflation adjustments might affect your tax situation. Our experts can help you plan ahead to minimize your tax liability and maximize your deductions.
Plan Ahead for 2025 Taxes with TaxOnTrack
At TaxOnTrack, we stay updated on all IRS tax changes so you don’t have to. By working with us, you’ll be able to make the most of the new tax brackets, deductions, and credits. Contact us today to get ahead on tax planning and ensure a smooth filing experience for the 2025 tax year!
