06/26/2025
Key Changes & Adjustments for 2025:
Standard Deduction: The standard deduction amounts have increased for all filing statuses due to inflation. For married couples filing jointly, it's $30,000 (up $800), and for single filers, it's $15,000 (up $400). Heads of households can claim $22,500, a $600 increase. Those aged 65 or older or who are blind can claim an additional standard deduction of $2,000 (single) or $1,600 (joint).
Tax Brackets: While the seven federal income tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) remain the same, the income thresholds for each bracket have been adjusted upward for inflation.
Estate and Gift Tax: The basic exclusion amount for estates of individuals who die in 2025 is $13.99 million, up from $13.61 million in 2024. The annual exclusion for gifts also rises to $19,000 per recipient.
Retirement Plan Contributions:
The 401(k), 403(b), governmental 457, and Thrift Savings Plan employee contribution limit increases to $23,500.
The IRA contribution limit for individuals under 50 remains at $7,000, and $8,000 for those 50 and over.
SEP IRA contribution limit increases to $70,000 or 25% of compensation, whichever is less.
SIMPLE IRA contribution limit rises to $16,500.
Adoption Credit: The maximum adoption credit is $17,280.
Alternative Minimum Tax (AMT): AMT exemption amounts and income phaseout thresholds have increased.
Health Savings Accounts (HSAs): Contribution limits have increased, along with the deductible and out-of-pocket expense limits for qualifying High Deductible Health Plans (HDHPs).
Clean Vehicle Tax Credit: The $7,500 credit for new electric vehicles may end for most vehicles after 2025.
https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025