Federal tax forms at the Internal Revenue Service in Chicago on Nov. 1, 2005. (Scott Olson/Getty Images)
With January approaching, Americans are gearing up for the 2025 tax filing season.
The Internal Revenue Service (IRS) has announced significant changes to tax brackets, standard deductions, and credits for 2024 and 2025 to account for inflation, which could impact taxpayers' finances.
In 2025, the IRS will continue adjusting tax brackets, increasing the standard deduction, and slightly raising income thresholds for single and married filers.
For 2025, the standard deduction will rise by $400 to $15,000 for single filers and married individuals filing separately. Married couples filing jointly will see an $800 increase to $30,000. For heads of households, the deduction will rise by $600 to $22,500.
Tax brackets have also been adjusted to ensure taxpayers pay the same proportion of their income despite inflation. Unless you receive at least a 2.8 percent raise in 2025, your income will not fall into a higher tax bracket.
Below are the most recent adjustments for tax year 2025, which will apply to tax returns filed starting tax season 2026.
To account for inflation, the IRS has also increased thresholds for the Alternative Minimum Tax (AMT) and Earned Income Tax Credit (EITC) for 2025.
These exemptions begin to phase out at higher income levels.
For comparison below are brackets for tax year 2024 and apply to income tax returns filed in 2025.
For 2024, the IRS has raised the contribution limit for employee health savings accounts to $3,200.