IRS Unveils 2025 Income Tax Brackets and Standard Deductions

Adjustments to Standard Deductions for Tax Year 2025

Starting in tax year 2025, single taxpayers and married individuals filing separately will see their standard deduction rise to $15,000, increasing by $400 from the previous rate of $14,600. Married couples filing jointly will enjoy a rise of $800, bringing their standard deduction to $30,000. For heads of households, the increase is $600, resulting in a standard deduction of $22,500.

Changes to Marginal Tax Brackets for 2025

The IRS has also announced adjustments to tax brackets. These adjustments determine the taxable portion of income after accounting for standard or itemized deductions. Below are the new marginal tax brackets:

• 37% for income greater than $626,350 ($751,600 for married couples)
• 35% for income over $250,525 ($501,050 for married couples)
• 32% for income over $197,300 ($394,600 for married couples)
• 24% for income over $103,350 ($206,700 for married couples)
• 22% for income over $48,475 ($96,950 for married couples)
• 12% for income over $11,925 ($23,850 for married couples)
• 10% for incomes of $11,925 or less ($23,850 or less for married couples)

Notably, the top tax rate is unchanged, remaining at 37% for those over $626,350 or $751,600 for married couples. The adjustments to these thresholds reflect an inflationary response that aims to benefit the average taxpayer and enhance take-home pay.

Additional Changes Affecting Taxpayers

Starting in 2025, the maximum Earned Income Tax Credit will increase to $8,046 for qualifying individuals with children, up from $7,830. Meanwhile, the alternative minimum tax exemption will rise to $88,100 for individual filers. For married couples filing together, the exemption will increase to $137,000, with phase-out thresholds adjusted accordingly.

What Remains the Same in 2025

Despite numerous changes, certain aspects of the tax code will remain unchanged. Personal exemptions stay at zero, and there are no restrictions on itemized deductions, insisting on continuity in some areas.

Remember to check back for more updates on tax regulations as the IRS continues to provide clarity on the 2025 tax landscape.