IRS announces adjustments to pension and pension plan contributions for 2025

WASHINGTON (AP) — The IRS on Friday announced an increase in the amount individuals can contribute to their 401(k) plans in 2025 — to $23,500, up from $23,000 in 2024.

The Domestic Tax Authorities has detailed the increases in annual cost-of-living adjustments for pension plans and other retirement accounts.

Employees who participate in 403(b) and the federal government’s Thrift Savings Plan will also be able to increase their annual contributions to $23,500 in 2025, up from $23,000 in 2024.

Some annual contributions remain the same. The limit for annual contributions to an IRA remains $7,000 and the IRA catch-up contribution limit for people age 50 and older remains $1,000 through 2025.

The agency announced annual increases to the standard deduction in its annual report last week inflation adjustments for 2025. For single taxpayers and married individuals filing separately in tax year 2025, the standard deduction increases to $15,000 – an increase of $400 from 2024.

For couples filing jointly, the standard deduction for 2025 is $30,000, an increase of $800 from the year before. And heads of households will receive a standard deduction of $22,500, an increase of $600 from 2024.

Income thresholds for all seven levels of the federal tax brackets were also adjusted upward.

Last month, the Social Security Administration created a Increase in the cost of living by 2.5% for benefit recipients from January. That translates to an average jump of more than $50 in monthly checks for millions of people.

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