The Internal Revenue Service (IRS) on Tuesday announced higher standard deductions for taxpayers in 2025 as part of its annual adjustments to account for inflation.
This announcement marks a slight respite for taxpayers, even if the changes are smaller compared to previous years.
The standard deduction for single filers and married people filing separately will be $15,000 in 2025, an increase of $400 from the previous year. Married couples filing jointly will see their deduction increase to $30,000, an increase of $800. Meanwhile, heads of household will get a $22,500 deduction, up $600.
These changes also come with revisions to the income thresholds for the seven federal tax brackets.
Federal income tax brackets determine how much tax you owe on different parts of your “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income. The result is your taxable income, which is divided into portions taxed at progressively higher rates, depending on the federal tax bracket in which you fall.
Although the top tax rate of 37% remains unchanged, it will now apply to people earning more than $626,350 for single taxpayers in 2025, up from $609,350 in 2024.
Patrick Semansky/AP
Other new tax brackets are 35 percent for income above $250,525 ($501,050 for married couples filing jointly); 32 percent for incomes above $197,300 ($394,600 for married couples filing jointly); 24 percent for incomes above $103,350 ($206,700 for married couples filing jointly); 22 percent for incomes above $48,475 ($96,950 for married couples filing jointly); 12 percent for incomes above $11,925 ($23,850 for married couples filing jointly); and 10 percent for incomes of $11,925 or less ($23,850 or less for married couples filing jointly).
The IRS also increased the numbers for other provisions, including long-term capital gains brackets, estate and gift tax exemption, and child tax credit eligibility, among others .
This year’s adjustments reflect a more tempered inflationary environment, with U.S. inflation recently hitting its lowest level in more than three years. However, Americans continue to face high “basic” prices, driven by rising costs in areas such as medical care, auto insurance, and airfares.
Despite the increases, the adjustments are smaller than those observed in previous years. Last year’s tax adjustments saw the standard deduction for single filers increase by $750, while joint filers and heads of household saw their deductions increase by $1,500 and $1,100, respectively.
Tuesday’s announcement from the IRS indicates that some items will remain unchanged for 2025. These include personal exemptions, which will remain at 0, as for the 2024 tax year. There are still no limitations on itemized deductions for tax year 2025 since this limitation was removed. by the Tax Cuts and Jobs Act of 2017.
This article includes reporting from the Associated Press.
