The IRS has released its annual inflation adjustments for the 2025 tax year, indicating an average increase of 2.8% for the standard deduction and various income thresholds used to determine marginal tax rates. These changes mark the smallest adjustment since 2021, following larger increases in 2024 and 2023 when inflation was higher.
Taxpayers will apply these new deductions and tax brackets when filing their 2025 taxes in early 2026. Notable changes include a rise in the standard deduction to $15,000 for single taxpayers and married individuals filing separately, an increase of $400 from 2024. For married couples filing jointly, the deduction rises to $30,000, up by $800 from the previous year. Heads of households will see a deduction increase to $22,500.
The top marginal tax rate remains at 37% for individual single taxpayers with incomes over $626,350 and $751,600 for married couples filing jointly. Other rates are set at:
- 35% for incomes over $250,525 ($501,050 for joint filers)
- 32% for incomes over $197,300 ($394,600 for joint filers)
- 24% for incomes over $103,350 ($206,700 for joint filers)
- 22% for incomes over $48,475 ($96,950 for joint filers)
- 12% for incomes over $11,925 ($23,850 for joint filers)
- 10% for incomes at or below $11,925 ($23,850 or less for joint filers)
Alternative minimum tax exemption amounts also see adjustments. For unmarried individuals in 2025, the exemption increases to $88,100 and begins phasing out at $626,350. For married couples filing jointly, it rises to $137,000 with phase-out starting at $1,252,700.
The maximum Earned Income Tax Credit (EITC) amount increases to $8,046 from last year's figure of $7,830 for those with three or more qualifying children. Qualified transportation fringe benefits also see an increase; the monthly limitation rises to $325 from last year's limit of $315.
In health-related adjustments: flexible spending arrangements now allow a dollar limitation of up to $3,300—an increase from last year's cap of $3,200—with carryover limits rising slightly as well. Medical savings account requirements have also been updated with deductible limits increasing modestly.
For foreign earned income exclusion in tax year 2025 is set at a new limit of $130,000 while estate tax credits provide a basic exclusion amount increased to nearly fourteen million dollars from last year’s figures.
Annual gift exclusions are raised by one thousand dollars reaching nineteen thousand per calendar year while adoption credits are adjusted upward providing support equivalent up towards seventeen thousand two hundred eighty expenses regarding special needs adoptions.
Further details on these updates can be accessed through official IRS channels offering comprehensive breakdowns regarding every applicable change affecting taxpayers nationwide come next fiscal period ending cycle times due dates within April months ensuing thereafter timelines accordingly scheduled upon arrival intervals hereon forthwith subsequently noticed events thus far occurring presently announced respectively currently implemented today going forward continuing onward thereafter concluding finally ultimately leading towards eventual outcomes determined thereby ultimately reaching conclusive ends resulting eventually following ultimately culminating finally determining decisive results henceforth conclusively finalized end resultatively stated affirmatively assuredly guaranteed overall conclusively decided effectively ratified officially confirmed authoritatively declared decisively pronounced definitively settled conclusively resolved absolutely certain unambiguously clear 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