IRS Announces Tax Brackets for 2025, Updated Standard Deduction

Every year, the IRS updates common tax provisions, such as income tax brackets and the standard deduction, to ensure that the tax code keeps up with the rising cost of living.

These adjustments — formally known as inflation adjustments — help prevent “bracket creep,” in which taxpayers who received a cost-of-living increase may pay more taxes even though their purchasing power remains unchanged.

In recent years, high inflation has led to larger annual adjustments — 7.1% in 2023 and 5.4% in 2024. However, as inflation cools, the 2025 adjustments are smaller, at 2.8%.

While next year’s changes are modest, they could still mean lower tax bills for some when they file in 2026. Here’s a look at how certain limits and tax credits will change for tax year 2025, plus a comparison with 2024.

In the US, there are seven marginal rates — 10%, 12%, 22%, 24%, 32%, 35% and 37% — that will remain unchanged in 2025.

For 2025, the IRS is adjusting tax brackets for each filing status – tax brackets are the income windows that determine where a tax rate ends and begins. The adjustments mean that some people may be able to stay in lower tax brackets, and those who received a cost-of-living increase may avoid having a portion of their income pushed into a higher bracket.

Married filers, for example, can earn up to $96,950 to stay at a top tax rate of 12%, compared to $94,300 in 2024. This increase means some couples may be able to shelter an additional $2,650 from a tax rate highest tax rate in 2025.

2023 vs. 2023 Tax Brackets 2024: declaration of joint marriage

The IRS allows most filers to reduce their taxable income by taking the standard deduction or itemizing their returns.

THE standard deductiona fixed amount based on claim status and age, is popular because it requires less work to claim and is generally more beneficial for those who may not have deductible expenses.

For 2025, the standard deduction will be $15,000 for single filers and married filers separately, a $500 increase from 2024. Joint filers will be eligible to receive $30,000 and heads of family will be able to receive US$22,500, an increase of US$800 and US$600 compared to 2024, respectively.

Also included in the IRS’s 27-page inflation advisory are several changes to several tax provisions beyond federal tax brackets.

Starting in 2025, taxpayers who contribute to a health flexible spending account (FSA) can contribute up to $3,300 and, if their plan allows, carry over up to $660 into the next tax year.

For those with health savings accounts, the contribution limit in 2025 will increase to $4,300 for self-insured coverage and $8,550 for family coverage.

The annual gift exclusion, which limits how much taxpayers can give to an individual without filing a gift tax return on certain donations, will increase to $19,000 per person in 2025, a $1,000 increase from 2024.

The lifetime estate tax exclusion sets a limit on the taxation of assets after a wealthy person’s death. In 2025, estates valued at or below $13.9 million will not be subject to estate tax, up from $13.6 million in 2024.