The Internal Revenue Service (IRS) has released the federal income tax brackets for the 2025 tax year, implementing adjustments for more than 60 tax provisions to account for inflation, according to USA Today. These modifications are designed to prevent taxpayers from being pushed into higher tax brackets due to inflation-induced income increases, without a corresponding rise in real purchasing power. Though Tax Day is April 15, we still don’t know for sure when the start of tax season will be, Khou 11 reports.
For the 2025 tax year, the federal income tax brackets are as follows:
- 10%: For single filers with incomes up to $11,925; for married couples filing jointly, up to $23,850.
- 12%: For single filers with incomes over $11,925; for married couples filing jointly, over $23,850.
- 22%: For single filers with incomes over $48,475; for married couples filing jointly, over $96,950.
- 24%: For single filers with incomes over $103,350; for married couples filing jointly, over $206,700.
- 32%: For single filers with incomes over $197,300; for married couples filing jointly, over $394,600.
- 35%: For single filers with incomes over $250,525; for married couples filing jointly, over $501,050.
- 37%: For single filers with incomes over $626,350; for married couples filing jointly, over $751,600.
These adjustments represent approximately a 2.8% increase from the previous year, reflecting the current inflation trends.
In addition to the tax bracket adjustments, the IRS has increased the standard deduction amounts for 2025:
- Single Filers: The standard deduction rises to $15,000, up from $14,600 in 2024.
- Married Couples Filing Jointly: The deduction increases to $30,000, up from $29,200 in the previous year.
- Heads of Household: The standard deduction will be $22,500, an increase from $21,900 in 2024.
These increases aim to reduce taxable income for many individuals, potentially lowering overall tax liabilities.
The inflation adjustments mean that some taxpayers may experience a slight reduction in their tax bills, as more of their income is taxed at lower rates. However, it’s essential to note that not all tax parameters are adjusted for inflation. For instance, the $10,000 cap on state and local tax (SALT) deductions remains unchanged, which could continue to impact taxpayers in high-tax states.
Taxpayers should review these changes to understand their potential impact and consider consulting with tax professionals to optimize their tax strategies in light of both current adjustments and potential future legislative changes.
