Each year, the Internal Revenue Service (IRS) adjusts income tax brackets to offset inflation. Since inflation is currently lower than in previous years, the adjustments for inflation will increase tax brackets by about 2.8% for 2025. Keep in mind that the adjustments below apply to income tax returns that you’ll file in 2026.
2025 Standard Deductions
- Single taxpayers and married individuals filing separately: the standard deduction rises to $15,000 for 2025, an increase of $400.
- Married couples filing jointly: the standard deduction rises to $30,000, an increase of $800.
- Heads of households: the standard deduction rises to $22,500, an increase of $600.
Note: Seniors age 65 and over can claim an additional standard deduction of $2,000 for single filers and $1,600 for joint filers.
“Tax planning is a crucial component of your financial strategy for retirement.”
2025 Marginal Rates
Keep in mind that if you’re married and filing separately, you’ll pay the same tax rate as an unmarried taxpayer.
- 37% for incomes over $626,350 for unmarried taxpayers ($751,600 for married couples filing jointly).
- 35% for incomes over $250,525 for unmarried taxpayers ($501,050 for married couples filing jointly).
- 32% for incomes over $197,300 for unmarried taxpayers ($394,600 for married couples filing jointly).
- 24% for incomes over $103,350 for unmarried taxpayers ($206,700 for married couples filing jointly).
- 22% for incomes over $48,475 for unmarried taxpayers ($96,950 for married couples filing jointly).
- 12% for incomes over $11,925 for unmarried taxpayers ($23,850 for married couples filing jointly).
- 10% for incomes $11,925 or less for unmarried taxpayers ($23,850 or less for married couples filing jointly).
2025 Earned Income Tax Credits
The Earned Income Tax Credit (EITC) is a refundable credit for people with an earned income below a certain threshold. For qualifying taxpayers with three or more qualifying children, the 2025 maximum EITC is $8,046 (up from $7,830); $7,152 (up from $6,960) for two qualifying children; $4,328 (up from $4,213) for one qualifying child; and $649 (up from $632) with no qualifying children. (See the Revenue Procedure for other categories, income thresholds, and phase-outs.)
Other Changes For Tax Year 2025
- Estate tax credits: a basic exclusion of $13,990,000, increased from $13,610,000 in 2024.
- Annual exclusion for gifts: increased to $19,000 increased from $18,000 in 2024.
- Adoption credits: maximum credit allowed for an adoption of a child with special needs is the amount of qualified adoption expenses up to $17,280, increased from $16,810 in 2024.
Tax planning is a crucial component of your financial strategy for retirement. To learn more, touch base with an FRC® trained advisor.
Source:https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
