IRS Announces Tax Inflation Adjustments for 2025
Posted by Bradley Bach on November 15, 2024
The IRS has announced the annual inflation adjustments for tax year 2025, which will impact taxpayers when they file their returns in 2026. Key changes include:
- Standard Deductions:
- Single taxpayers and married individuals filing separately: $15,000 (up by $400).
- Married couples filing jointly: $30,000 (up by $800).
- Heads of households: $22,500 (up by $600).
- Marginal Tax Rates:
- Top rate of 37% for incomes over $626,350 (single) and $751,600 (married filing jointly).
- Other rates: 35%, 32%, 24%, 22%, 12%, and 10% for various income brackets.
- Alternative Minimum Tax Exemption:
- Unmarried individuals: $88,100.
- Married couples filing jointly: $137,000.
- Earned Income Tax Credit:
- Maximum amount for taxpayers with three or more children: $8,046.
- Qualified Transportation Fringe Benefit:
- Monthly limitation: $325.
- Health Flexible Spending Arrangements:
- Contribution limit: $3,300.
- Maximum carryover amount: $660.
- Medical Savings Accounts:
- Self-only coverage deductible: $2,850 to $4,300.
- Family coverage deductible: $5,700 to $8,550.
- Foreign Earned Income Exclusion:
- Increases to $130,000.
- Estate Tax Credits:
- Basic exclusion amount: $13,990,000.
- Annual Gift Exclusion:
- Increases to $19,000.
- Adoption Credits:
- Maximum credit: $17,280.
Certain items remain unchanged, such as personal exemptions and limitations on itemized deductions.
To learn more, reach out to Lumsden McCormick or go to the IRS website.
Additional Resources for 2025
for more information
Bradley joined the Firm with thirteen years of experience in both public and private accounting. As a principal in the Firm's tax department, Brad's primary focus is in the construction industry and in real estate partnerships and transactions. He also provides tax planning and compliance for high-wealth individuals.