Though we’re in the midst of filing tax returns for 2024, the income you’re earning now will be subject to updated IRS regulations for 2025. There are adjustments to more than 60 tax provisions that will impact you when you file in 2026 and you can read about all of them in Revenue Procedure 2024-40. Here is an overview of the most impactful changes.
2025 Standard Deduction
In general, the standard deduction is adjusted each year for inflation and it varies based on your filing status, number of dependents, and age.
- Single and Married Filing Separate – $15,000: For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024.
- Married Filing Joint – $30,000: For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024.
- Head of Household – $22,500: For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024.
Marginal rates in 2025
The marginal tax rate is the amount of additional taxes you pay on each additional dollar earned after the standard deduction amount. Calculating your marginal tax rate can be confusing because it takes a tiered approach where your first dollars are taxed at the lowest percentage rate, with increases until you reach your bracket. Please see the example on the right below to learn how marginal rates are calculated.
For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
- 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
- 12% for incomes $11,925 – $48,475 ($23,850 – $96,950 for married couples filing jointly).
- 22% for incomes over $48,475 – $103,350 ($96,950 – $206,700 for married couples filing jointly).
- 24% for incomes over $103,350 – $197,300 ($206,700 – $394,600 for married couples filing jointly).
- 32% for incomes over $197,300 – $250,525 ($394,600 – $501,050 for married couples filing jointly).
- 35% for incomes over $250,525 – $626,350 ($501,050 – $751,600 for married couples filing jointly).
Child Tax Credit
In 2025, the Child Tax Credit continues to max out at $2,000, with a refundable portion of up to $1,700. The child tax credit thresholds also remain unchanged at $200,000 for single filers and $400,000 for those who are married filling joint. This credit is one to watch. The $2,000 credit with increased thresholds has been in effect since the Tax Cuts and Jobs Act in 2017, but it scheduled to be reverted to $1,000 in 2026 with phase-outs at $75,000 for single filers and $110,000 for married filling joint. Congress may approve an extension to maintain the doubled credit.
There is also an Earned Income Tax Credit for taxpayers who have qualifying children. In 2025, the maximum Earned Income Tax Credit amount is $8,046, which is an increase from $7,830 for tax year 2024.
Medical Savings Accounts
For the taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to Health Flexible Spending Account (FSA) rises to $3,300, increasing from $3,200 in tax year 2024. The Health Savings Account (HSA) contribution limits will increase to $4,300 for individuals and $8,550 for families, which are increases from $4,150 and $8,300, respectively in 2024).
Contributions and Benefit Limits
Below are some of the thresholds for the most common savings plans, but you can save our guide with more information by clicking here.
The annual elective deferral limit for 401(k) plan employee contributions increased by $500 to go from $23,000 in 2024 to $23,500 in 2025. Employees aged 50 or older may contribute up to an additional $7,500 for a total of $31,000 to their 401(k).
The total contribution limit for both employee and employer to 401(k) defined contribution plans under section 415(c)(1)(A) increased from $69,000 to $70,000 ($77,500 if age 50 or older). New to the catch-up this year is that employees aged 60, 61, 62, and 63 can contribute an even higher catch-up contribution up to $11,250 as part of a change made in SECURE 2.0.
The SIMPLE Plan Employee Deferral also increased by $500 to go from $16,000 in 2024 to $16,500 in 2025. The catch-up contribution remains at $3,500, but like the 401(k) Plan, there is an additional catch-up amount of $5,250 for employees aged 60, 61, 62, and 63.
The contribution limit and catch-up amounts maintain at $7,000 and $1,000, respectively.
Estates of decedents who pass away during 2025 have a basic exclusion amount of $13,990,000, which is increased from $13,610,000 for estates of decedents who died in 2024.
This amount increases by $1,000 to $19,000 for calendar year 2025, rising from $18,000 for calendar year 2024.
These changes may seem nominal, but if used together, they provide taxpayers with opportunities to increase their savings and decrease their tax liability. If you would like to build a customized plan to decrease your tax burden and increase your retirement income, please set up a meeting. We specialize in helping individuals maximize their income opportunities.
Taylor Clinkenbeard, CPA
Taylor is a Manager in our tax and client accounting services teams. She has developed specific expertise in software, accounting processes, and tax laws to serve our clients.
