The Internal Revenue Service released the updated income tax brackets, standard deduction, and retirement contribution limits for the 2025 tax year. While these changes won’t impact you for some time, it may benefit you to start thinking ahead.

The top rate remains 37%, but remember that 2017’s Tax Cuts and Jobs Act expires at the end of 2025. Overall, more than 60 provisions have changed at the federal level. Here are a few of the most critical changes in the federal tax bracket and retirement contribution limit. While the IRS has highlighted its changes, keep an eye out for any changes to individual and business taxes that may be pending in your state.(1)

Tax Bracket Inflation Adjustment

Overall, tax brackets have been adjusted upwards for 2025. This adjustment is based on the Consumer Price Index and primarily accounts for inflation.

Standard Deduction

The standard deduction has increased to $30,000 for married couples filing jointly, up $800 from the previous year. For single filers, this number increased by $400 to $15,000.

Marginal Rates

Marginal tax rate brackets are also increasing.

Gift Tax

The annual gift tax exclusion for 2025 is $19,000, an increase of $1,000 from the previous year.

Estate Tax Credit

Individuals receiving an inheritance in 2025 will be able to exclude $13,990,000 from federal taxation, up from $13,610,000 in the previous year.

All information sourced from IRS.gov. Remember that we provide updates for informational purposes only, so consult with your tax professional before making any changes in anticipation of the new 2025 levels. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don't levy a state income tax.

Sources:

1. IRS.gov