IRS releases 2025 tax brackets, inflation adjustments
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The Internal Revenue Service released its annual inflation adjustments Tuesday with new federal income tax brackets and standard deductions for the 2025 tax year.
Why it matters: The changes, which include other tax provisions, are going up by the smallest amount in recent years.
- The adjusted withholding rates will boost paychecks and lower income tax for many Americans.
Driving the news: The new tax adjustments apply to tax returns filed in 2026.
- The IRS also changed 2025 tax withholding tables, which determine how much money employers should withhold from employee wages in paychecks for federal taxes.
Income tax brackets 2025
The big picture: By adjusting the tax brackets — as the IRS does every year — it is attempting to stop "bracket creep," which happens when inflation pushes taxpayers into a higher income tax bracket without an increase in real income. (See chart above.)
Tax deductions for 2025 tax year
Details: The 2025 tax year standard deduction for married couples filing jointly rises to $30,000 — an $800 increase from $29,200 for the 2024 tax year.
- For single taxpayers, the standard deduction is $15,000, a $400 increase from the 2024 deduction of $14,600.
- For heads of households, the standard deduction will be $22,500, a $600 increase from the 2024 tax year amount.
IRS increases estate tax credits for 2025
Zoom in: The IRS said estates of people who die during 2025 have a basic exclusion amount of $13.99 million, up from $13.61 million for estates of people who died in 2024.
- Annual exclusion for gifts increases to $19,000 for the calendar year 2025, up from $18,000 for the calendar year 2024.
Social Security increase 2025
Retirement and disability benefits for 2025 will increase by 2.5% and about $50 a month starting in January, the Social Security Administration announced Oct. 10.
Yes, but: The cost-of-living adjustment, known as COLA, is lower than the average of the last decade of 2.6%.
- The adjustment affects more than 72.5 million recipients of Social Security retirement and disability benefits.
Editor's note: This story was updated to include information on 2025 estate and gift tax credits and Social Security benefits increase.
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