The Internal Revenue Service announced its annual inflation-adjusted changes to tax brackets, annual exclusions for gift and estate taxes, FSA limits, and more for 2025. We’ve provided a few highlights of the release and a summary of the financial facts and figures you need to know for 2025.
Standard Deductions
- The standard deduction for married couples filing jointly for tax year 2025 rises to $30,000, an increase of $800 from tax year 2024.
- For single taxpayers and married individuals filing separately, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024.
- 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.
Estate Tax Credits
- Estates of decedents who die during 2025 have a basic exclusion amount of $13,990,000, increased from $13,610,000 for estates of decedents who died in 2024.
- The increased exemption amounts under the Tax Cuts and Jobs Act (TCJA) are scheduled to run through the end of 2025; barring an extension by Congress, these limits would sunset at the end of 2025 and, beginning in 2026, the basic exclusion amount would revert to the 2017 level of $5 million per person, plus inflation adjustments (estimated to be around $7 million per person, in current dollar terms).
Annual Exclusion for GiftS
The annual exclusion for gifts increases to $19,000 for calendar year 2025, increased from $18,000 for calendar year 2024.
Marginal Rates
Tax rates remain unchanged; however, the income limit for each tax bracket has changed, meaning more of your income may fall in a lower tax bracket.
In addition to tax savings, the IRS also adjusted the contribution limits to retirement accounts, Health Savings Accounts, and Flexible Spending Accounts. Click the image below to view and save a consolidated summary of all the changes and limits individuals and business owners need to know for 2025.
Keeping up with the constant tax changes can be difficult and time consuming. Start planning for 2025 today so you can keep as much of your hard earned dollars as possible!
More detail on all the IRS tax inflation adjustments for 2025 can be found at www.irs.gov.
