The IRS has rolled out its updates for the 2025 tax year, including changes that could keep more money in your pocket. These adjustments—like higher income tax brackets and other limits—help protect your tax bill from inflation’s effects. Keep in mind that not every detail shifts each filing year, but the changes that do happen can make a meaningful difference. Here is what these changes mean for taxpayers filing their 2025 taxes.
What’s New for the 2025 Tax Season?
The IRS has made several adjustments for 2025, including inflation-related updates to tax brackets. Let’s break it all down and show you what it means for your wallet.
Tax Brackets: What Do They Mean for You?
Tax brackets are designed to make the tax system fairer by requiring individuals with higher incomes to pay a higher percentage in taxes, while those with lower incomes pay less.
To account for inflation, the IRS adjusts tax brackets annually. For the 2025 tax year, these brackets increased by about 2.8%. This adjustment prevents taxpayers from moving into higher tax brackets due to rising wages or prices, helping to maintain their purchasing power.
It’s important to note that tax bracket thresholds depend on your filing status, such as single, married filing jointly, married filing separately, or head of household.
Single Filer Tax Brackets
Here’s a breakdown of the updated 2025 tax brackets for single filers to help you understand where your income falls and what rate applies. Keep in mind these numbers reflect federal taxes only.
| Tax Rate | 2025 Updated Threshold | 2024 Threshold |
|---|---|---|
| 10% | $0 to $11,925 | $0 to $11,600 |
| 12% | $11,926 to $48,475 | $11,601 to $47,150 |
| 22% | $48,476 to $103,350 | $47,151 to $100,525 |
| 24% | $103,351 to $197,300 | $100,526 to $191,950 |
| 32% | $197,301 to $250,525 | $191,951 to $243,725 |
| 35% | $250,526 to $626,350 | $243,726 to $609,350 |
| 37% | $626,351 or more | $609,351 or more |
Married Filing Jointly vs. Separately Tax Brackets
When married couples file jointly, they combine their incomes and deductions, often benefiting from lower taxes and higher deductions. Filing separately is when each spouse reports their income individually, which can result in higher tax rates and reduced deductions but may be advantageous in specific situations, like protecting liability or managing certain deductions.
Here’s a look at the 2025 tax brackets for married filers, which will give you the clarity to plan your finances confidently and maximize your tax strategy.
| Tax Rate | Married Filing Jointly (2025 Threshold) | Married Filing Jointly (2024 Threshold) | Married Filing Separately (2025 Threshold) | Married Filing Separately (2024 Threshold) |
|---|---|---|---|---|
| 10% | $0 to $23,850 | $0 to $23,200 | $0 to $11,925 | $0 to $11,600 |
| 12% | $23,851 to $96,950 | $23,201 to $94,300 | $11,926 to $48,475 | $11,601 to $47,150 |
| 22% | $96,951 to $206,700 | $94,301 to $201,050 | $48,476 to $103,350 | $47,151 to $100,525 |
| 24% | $206,701 to $394,600 | $201,051 to $383,900 | $103,351 to $197,300 | $100,526 to $191,950 |
| 32% | $394,601 to $501,050 | $383,901 to $487,450 | $197,301 to $250,525 | $191,951 to $243,725 |
| 35% | $501,051 to $751,600 | $487,451 to $731,200 | $250,526 to $375,800 | $243,726 to $365,600 |
| 37% | $751,601 or more | $731,201 or more | $375,801 or more | $365,601 or more |
Head of Household Tax Brackets
The head of household filing status is for single people who care for a dependent and pay at least half of their living expenses. Using this filing status grants you access to broader tax brackets, which can result in a lower effective tax rate compared to the single filing status.
| Tax Rate | 2025 Threshold | 2024 Threshold |
|---|---|---|
| 10% | $0 to $17,000 | $0 to $16,550 |
| 12% | $17,001 to $64,850 | $16,551 to $63,100 |
| 22% | $64,851 to $103,350 | $63,101 to $100,500 |
| 24% | $103,351 to $197,300 | $100,501 to $191,950 |
| 32% | $197,301 to $250,500 | $191,951 to $243,700 |
| 35% | $250,501 to $626,350 | $243,701 to $609,350 |
| 37% | $626,351 or more | $609,351 or more |
More Notable 2025 Tax Changes
Because of inflation, the IRS has to make regular adjustments to deductions, tax credits, retirement contribution limits, and other thresholds. The IRS does not calculate inflation uniformly, so some changes are more significant than others.
Explore all of the changes for the 2025 tax year below to better understand how these updates could impact your tax planning.
Higher Standard Deductions
The standard deduction is a set dollar amount that lowers your taxable income. It’s available to most taxpayers who choose not to itemize their deductions, which is helpful if a taxpayer doesn’t want to track expenses like medical costs or donations to charity.
The amount you can deduct and shelter from your income depends on your filing status. For the 2025 tax year, the IRS has increased the standard deduction limit by 2.74% for all filing classes. Here’s a breakdown:
- Standard Deduction (Single or Married Filing Separately): From $14,600 in 2024 to $15,000 in 2025.
- Standard Deduction (Filing Jointly): From $29,200 in 2024 to $30,000 in 2025.
- Standard Deduction (Head of Household): From $21,900 in 2024 to $22,500 in 2025.
With these increases, taxpayers may decide it’s worth using the standard deduction instead of itemizing deductions.
Increased Deductions for Seniors
The increased deductions for seniors (age 65 and older) in 2025 help people who may have higher living costs or medical bills as they get older:
- $2,000 if filing as a single or head of household (up from $1,950 in 2024)
- $1,600 per qualifying individual if married filing jointly or separately (up from $1,550 in 2024)
Furthermore, the IRS offers higher deductions for seniors who are also blind and face extra challenges because of their disability:
- $4,000 if filing as a single or head of household (up from $3,900 in 2024)
- $3,200 per qualifying individual if married filing jointly or separately (up from $3,100 in 2024)
These deductions lower the amount of money that is taxed, making it easier for seniors (or seniors who are blind) to pay their bills and take care of their needs. In 2025, these additional deductions increased slightly from 2024, providing even more financial relief.
Higher Retirement Contribution Limits
For the 2025 tax year, the IRS increased retirement contribution limits, allowing individuals to save more for retirement.
The contribution limit for employer-sponsored retirement plans, including 401(ks), 403(b)s, and 457 plans, increased to $23,500 from $23,000 in 2024. The catch-up contribution limit will stay at $7,500 for those aged 50-59 and 64+.
Beginning in 2025, a special catch-up contribution of $11,250 is available for anyone between 60 and 63. This addition will help people about to retire amplify their savings efforts.
This change does not apply to Individual Retirement Plans (IRAs), as contribution limits will remain at $7,000. Americans aged 50 and older will still be able to make additional catch-up contributions of up to $1,000 to IRAs.
These adjustments can help you maximize tax-advantaged savings as part of your long-term financial planning.
Increased Estate Tax Exemption
The 2024 lifetime estate exemption of $13.61 million is set to increase to almost $14 million in 2025, or $28 million for married couples. This exemption helps avoid tax liability on all or some of your estate passed to heirs upon your death. It also results in a lower tax burden for your heirs, meaning they will receive more of your wealth.
As part of the Tax Cuts and Jobs Act of 2017, the estate tax exemption doubled. Unless lawmakers extend the TCJA beyond its current expiration of December 31, 2025, this exemption will be half its current limit for 2026 and beyond.
Higher Gift Exclusion
2025 tax law changes also include the IRS raising the gift exclusion from $18,000 to $19,000—a 5.56% increase.
It’s important to note that gifting more than the exclusion amount does not necessarily mean you’ll pay taxes on it. If you gift more than the limit, you must report the excess on IRS tax forms, such as Form 709 (United States Gift and Generation-Skipping Transfer Tax Return). The IRS subtracts the excess from your estate tax exemption limit ($13.99 million for 2025).
As long as your total gifts fall below the estate tax exemption, those funds are not subject to tax.
| Category | 2025 | 2024 |
|---|---|---|
| Standard Deduction (Single or Married Filing Separately) | $15,000 | $14,600 |
| Standard Deduction (Married Filing Jointly) | $30,000 | $29,200 |
| Standard Deduction (Head of Household) | $22,500 | $21,900 |
| Additional Deduction for Seniors (Single or Head of Household) | $2,000 | $1,950 |
| Additional Deduction for Seniors (Married Filing Jointly or Separately) | $1,600 | $1,550 |
| Additional Deduction for Blind Seniors (Single or Head of Household) | $4,000 | $3,900 |
| Additional Deduction for Blind Seniors (Married Filing Jointly or Separately) | $3,200 | $3,100 |
| Contribution Limits for Employer-Sponsored Retirement Plans | $23,500 | $23,000 |
| Maximum Extra Contribution for Employer-Sponsored Retirement Plans (Ages 50-59, 64+) | $7,500 | $7,500 |
| Maximum Extra Contribution for Employer-Sponsored Retirement Plans (Ages 60-63) | $11,250 | n/a |
| Contribution Limits for IRAs | $7,000 (plus an extra $1,000 for anyone 50+) | $7,000 (plus an extra $1,000 for anyone 50+) |
| Estate Tax Exemption | $13.99 million | $13.61 million |
| Gift Exclusion | $19,000 | $18,000 |
Capital Gains Tax Changes for 2025
The IRS taxes long-term capital gains—profits from investments held longer than one year—based on your taxable income. These brackets will increase by about 2.8% in 2025.
You only have to pay taxes on long-term capital gains once you sell an asset. If you keep stocks or other investments untouched in your portfolio, you won’t have to pay taxes on the growth of these investments.
If you sell investments and make a profit after owning them for less than one year, you’ll pay short-term capital gains tax. Short-term capital gains fall into ordinary income brackets, so you will file accordingly with your other income taxes.
Know what to expect when paying long-term capital gains tax by reviewing the increases from 2024 to 2025 below:
| Tax Rate | 2025 Filing Single (2024) | 2025 Married Filing Jointly (2024) | 2025 Married Filing Separately (2024) | 2025 Head of Household Filing (2024) |
|---|---|---|---|---|
| 0% | $0 to $48,350 ($0 to $47,025) | $0 to $96,700 ($0 to $94,050) | $0 to $48,350 ($0 to $47,025) | $0 to $64,750 ($0 to $63,000) |
| 15% | $48,351 to $533,400 ($47,026 to $518,900) | $96,701 to $600,050 ($94,051 to $583,750) | $48,350 to $300,000 ($47,026 to $291,850) | $64,751 to $566,700 ($63,001 to $551,350) |
| 20% | $533,401 or more ($518,901 or more) | $600,051 or more ($583,751 or more) | $300,001 or more ($291,851 or more) | $566,701 or more ($551,351 or more) |
Changes to Key Tax Credits in 2025
The IRS has made notable changes to two important tax credits for 2025, which can lower the taxes you owe when you file your individual income tax return on Form 1040:
- Earned income tax credits: The earned income tax credit helps low-income families reduce their tax bills. The more children they have, the larger credit a taxpayer will receive. For example, a taxpayer with three qualifying children may get a tax credit of $8,046, which is up from $7,830 in 2024.
- Adoption credits: Parents can deduct adoption-related expenses, which can encourage adoption. The tax credit is $17,280 in 2025, which is up from $16,810 in 2024.
What’s Staying the Same in the 2025 Tax Year?
While the IRS makes adjustments to some tax provisions each year, many important ones will stay the same for 2025. This stability means you can plan ahead and avoid unexpected changes.
Here are the provisions that will remain unchanged for 2025:
- Tax Rates for Income & Capital Gains: While thresholds have received adjustments to combat inflation, tax rates remain unchanged.
- Child Tax Credit: The IRS offers a tax credit of $2,000 per qualifying child with up to $1,700 as a refundable credit.
- Itemized Deduction: Just like in 2024, there is no limit on itemized deductions in 2025. This will continue to encourage taxpayers, especially high-income earners, to use the itemized deduction instead of the standard deduction.
- Personal Exemption: The Tax Cuts and Jobs Act eliminated this exemption, so it remains unusable for 2025.
- State and Local Tax (SALT) Deduction Cap: The SALT deduction cap remains at $10,000 for individuals and $5,000 for married couples filing separately in 2025. As a result, taxpayers can still no longer reduce the full amount of their state and local taxes.
Predictions for the 2026 Tax Year
There are several tax law changes set to occur when the Tax Cuts and Jobs Act (TCJA) sunsets at the end of 2025. Unless lawmakers make changes before then, many provisions will revert to their 2017 status. This shift will significantly alter the current tax code and planning.
Here’s what may come if the TCJA expires and Congress doesn’t extend it or introduce a similar replacement:
- Higher Tax Rates: Taxpayers may face increased rates and lower income thresholds, potentially raising tax obligations.
- Capital Gains Impact: Long-term capital gains may align with higher ordinary income brackets, increasing tax liabilities for high earners.
- Lower Standard Deductions: A smaller standard deduction could push more taxpayers to itemize deductions to lower taxable income.
- Reduced Estate Tax Exemption: The estate tax exemption may be halved, subjecting more estates to taxation.
- Return of Personal Exemptions: Personal exemptions may return, allowing taxpayers to make deductions per person (for themselves, their spouse, and their dependents).
- Elimination of SALT Deduction Cap: Taxpayers may be able to deduct the full amount of their state and local income tax if the cap goes away.
Legal Considerations
While inflation-adjusted tax brackets and deductions offer some relief, there are still important changes to watch for. If key provisions from the TCJA expire at the end of 2025, your tax situation could affect your tax planning for the future.
While LegalTemplates strives to offer the most updated information about tax regulations, we cannot provide tax advice. Be sure to consult a tax professional to learn how to navigate your situation.
Once you have their guidance, you can use our PDF editor to fill out various tax forms, including Form 1040, to stay on top of your tax obligations. For additional information on federal taxes, visit the IRS.
