As we move into the new year, the IRS has released the tax changes for 2025. These adjustments are meant to help taxpayers stay updated and make filing taxes easier. Some things will stay the same, while others will be improved to make taxes more fair and understandable.
Standard Deductions and Marginal Tax Rates
For 2025, standard deductions will increase slightly:
- Single filers and those married but filing separately will see an increase of $400, bringing their deduction to $15,000.
- Married couples filing jointly will get an $800 increase, bringing theirs to $30,000.
- Heads of households will get a $600 boost, making their deduction $22,500.
The top tax rate of 37% will stay the same for those earning over $626,350 (single) or $751,600 (married). However, other tax rates will change for different income levels:
- 35% for incomes over $250,525 ($501,050 for married couples)
- 32% for incomes over $197,300 ($394,600 for married couples)
- 24% for incomes over $103,350 ($206,700 for married couples)
- 22% for incomes over $48,475 ($96,950 for married couples)
- 12% for incomes over $11,925 ($23,850 for married couples)
- 10% for incomes $11,925 or less ($23,850 or less for married couples)
Changes to Tax Credits and Benefits
Some tax credits and benefits will also be adjusted:
- The Earned Income Tax Credit (EITC) will increase to a maximum of $8,046 for taxpayers with three or more children.
- The qualified transportation fringe benefit limit will rise to $325 per month.
- The health flexible spending account contribution limit will go up to $3,300.
- For the Alternative Minimum Tax Exemption, unmarried individuals will have a limit of $88,100, while married couples filing jointly will have a limit of $137,000.
Other IRS Changes
Other changes will affect taxpayers in various ways:
- Medical savings accounts will have new deductible ranges. For individual plans, the range will be from $2,850 to $4,300, and for family plans, it will be from $5,700 to $8,550.
- The amount of foreign earned income that is not taxed will increase from $126,500 in 2024 to $130,000 in 2025.
- The basic estate exclusion will rise to $13.99 billion, and the annual gift exclusion will go up to $19,000.
- The adoption tax credit for children with special needs will increase to $17,280.
Renewal of Preparer Tax Identification Numbers (PTINs)
The IRS has also started renewing the Preparer Tax Identification Numbers (PTINs) for over 810,000 tax preparers. These professionals must renew their PTINs online to avoid fines. The renewal fee of $19.75 remains unchanged. Tax preparers can also take the Annual Filing Season Program to improve the accuracy of federal tax returns.
The IRS changes for 2025 bring some important adjustments that will affect your tax filing. Whether it’s the increase in standard deductions, tax rates, or credits, these updates are designed to make taxes fairer and easier for everyone. It’s important for taxpayers to stay informed and prepare for these changes in the upcoming year.
What are standard deductions for 2025?
For 2025, single filers get $15,000, married couples filing jointly get $30,000, and heads of households get $22,500.
How much will the Earned Income Tax Credit increase?
It will go up to $8,046 for taxpayers with three or more qualifying children.
What are the new limits for medical savings accounts in 2025?
The deductible ranges for individual plans will be between $2,850 to $4,300, and for family plans, it will be $5,700 to $8,550.
How much can I contribute to my health savings account in 2025?
You can contribute up to $3,300 in 2025.
What is the new adoption tax credit amount for children with special needs?
The maximum credit will be $17,280 for adoptions of children with special needs.
