IRS releases 2025 tax year inflation adjustments

• Income thresholds and standard deductions increased for tax season 2026.

Each year, the Internal Revenue Service releases its annual inflation adjustments for the next tax year. On Tuesday, the 2025 adjustments were made public. These new levels will generally apply to income tax returns to be filed in the 2026 tax season.

For single taxpayers and married individuals filing separately, the standard deduction in 2025 will rise to $15,000 for 2025, an increase of $400 from 2024.

For married couples filing jointly, the standard deduction move up to $30,000, an increase of $800 from 2024, while the standard deduction for heads of households will be $22,500, an increase of $600 from the amount for tax year 2024.

Income thresholds for tax rates were also adjusted upwards, with the top income moving to $626,350, a $17,000 increase. Those individual single taxpayers making that amount or higher will pay 37 percent in taxes, as will those who married couples filing jointly who earn $751,600 or more.

The other six income levels were also increased at the following tax rates:

• 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
• 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
• 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
• 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
• 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
• 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly)

Increases released by the IRS on Tuesday were less than what has been seen in recent years. As reported by the Associated Press, “In tax adjustments announced last year, for example, the IRS raised single filers’ standard deduction by $750 between the 2023 and 2024 tax years — and by $1,500 and $1,100 for married couples and heads of households, respectively.”

Other notable increases include:

• For qualifying taxpayers who have three or more qualifying children, the tax year 2025 maximum Earned Income Tax Credit amount is $8,046, an increase from $7,830 for tax year 2024.

• For the taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,300, increasing from $3,200 in tax year 2024. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $660, increasing from $640 in tax year 2024.

• Annual exclusion for gifts increases to $19,000 for calendar year 2025, rising from $18,000 for calendar year 2024.

The IRS did note that due to the 2017 Trump-era Tax Cuts and Jobs Act there remains no limitation on itemized deductions for tax year 2025 nor is there a personal exemption provision.