With inflation still high, the IRS has announced higher federal income tax brackets and standard deductions for 2025. The changes are roughly a 5.4% increase of the tax brackets and standard deduction. Unless your income increases by 5.4% in 2025 the changes could result in a lower income tax liability for the year. Of course, that also depends on many other factors.
2025 Federal Income Tax Brackets
Below are tables of the new 2025 tax brackets for single individuals and couples who are married filing jointly.
2025 Marginal Federal Income Tax Brackets for Single Individuals
| Taxable Income | Taxes Owed |
|---|---|
| $11,925 or less | 10% of the taxable income |
| $11,926 to $48,475 | $1,193 plus 12% of the amount over $11,925 |
| $48,476 to $103,350 | $5,579 plus 22% of the amount over $48,475 |
| $103,351 to $197,300 | $17,652 plus 24% of the amount over $103,350 |
| $197,301 to $250,525 | $40,199 plus 32% of the amount over $197,300 |
| $250,526 to $626,350 | $57,231 plus 35% of the amount over $250,525 |
| $626,351 or more | $188,770 plus 37% of the amount over $626,350 |
2024 Marginal Federal Income Tax Brackets for Couples Married Filing Jointly
| Taxable Income | Taxes Owed |
|---|---|
| $23,850 or less | 10% of the taxable income |
| $23,851 to $96,950 | $2,385 plus 12% of the amount over $23,850 |
| $96,951 to $206,700 | $11,157 plus 22% of the amount over $96,950 |
| $206,701 to $394,600 | $35,302 plus 24% of the amount over $206,700 |
| $394,601 to $501,050 | $80,398 plus 32% of the amount over $394,600 |
| $501,051 to $751,600 | $114,462 plus 35% of the amount over $501,050 |
| $751,601 or more | $202,155 plus 37% of the amount over $751,600 |
Standard Deductions for 2024
The standard deduction for single individuals increases from $14,600 in 2024 to $15,000 for 2025. For couples who are married filing jointly the standard deduction increases from $29,200 in 2024 to $30,000 for 2025.
Contribution Limit Increases for HSAs and FSAs
There are higher annual contribution limits for HSAs in 2025. The individual limit increases from $4,150 to $4,300, and the family limit increases from $8,300 to $8,550. There is also a catch-up contribution amount of $1,000 additional for those age 55 or older.
For FSAs in 2024, the maximum salary reduction contribution amount is increasing from $3,200 to $3,300. In addition, the maximum carryover amount is increasing from $640 to $660.
Retirement Plan Contribution Limits for 2024
The contribution limits for 2025 for retirement plans such as 401(k), 403(b), IRA, and Roth IRA accounts can be found in the Escient Financial Insights article 2025 Retirement Plan Contribution Limits.
Tax Planning Opportunities
With these higher tax brackets, standard deductions, and contribution limits, there may be more tax saving opportunities available. As the new year approaches it's a great time to start planning for 2024 to minimize tax liability and increase your opportunities for financial success in the future.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Digital assets and cryptocurrencies are highly volatile and could present an increased risk to an investors portfolio. The future of digital assets and cryptocurrencies is uncertain and highly speculative and should be considered only by investors willing and able to take on the risk and potentially endure substantial loss. Nothing in this content is to be considered advice to purchase or invest in digital assets or cryptocurrencies.
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