Tax Changes Happening in 2025

Standard Deduction for 2025

For tax year 2025, the standard deduction for married couples filing jointly rises to $30,000, an increase of $800 from 2024.

For single taxpayers or those filing married filing separately, the standard deduction rose to $15,000, a $400 increase from the previous year.

Heads of households or unmarried taxpayers who have dependents and pay for more than half of the expenses of a household, can take a standard deduction of $22,500 in 2024, an increase of $600 from 2024.

Income Tax Brackets

There will still be seven tax brackets, but the income range for each rate has shifted slightly to account for inflation. For 2025, the following rates and income ranges apply:

Tax Rate	For Single Filers	For Married Individuals Filing Joint Returns	For Heads of Households
10%	$0 to $11,925	$0 to $23,850	$0 to $17,000
12%	$11,925 to $48,475	$23,850 to $96,950	$17,000 to $64,850
22%	$48,475 to $103,350	$96,950 to $206,700	$64,850 to $103,350
24%	$103,350 to $197,300	$206,700 to $394,600	$103,350 to $197,300
32%	$197,300 to $250,525	$394,600 to $501,050	$197,300 to $250,500
35%	$250,525 to $626,350	$501,050 to $751,600	$250,500 to $626,350
37%	$626,350 or more	$751,600 or more	$626,350 or more

 

IRA and 401(k) Limits are Slightly Higher

The traditional IRA and Roth contribution limits for 2025 are the same as 2024. Individuals can contribute up to $7,000 to an IRA, and those who are 50 and older also qualify to make an additional $1,000 catch-up contribution.

In addition, the 2025 contribution limits for tax-deferred 401(k)s and Roth 401(k)s have increased to $23,500. If you're age 50 or older, you qualify to make an additional $7,500 catch-up contribution for this tax year as well. If you are 60, 61, 62 or 63 you are eligible to do a catch-up contribution of $11,250 instead of $7,500 which would allow your total contribution to be $34,500 for 2025.

Health Savings Account (HAS) Deductible Increases

For 2025, the maximum you can contribute to an HSA is $4,300 for an individual and $8,550 for a family. People 55 and older can contribute an extra $1,000 catch-up contribution.

Alternative Minimum Tax (AMT) Exemption is Higher

Until the AMT exemption enacted by the Tax Cuts and Jobs Act expires in 2025, the AMT will mostly continue to affect households with incomes over $500,000. For 2025, the AMT exemptions are $88,100 for single filers and $137,000 for married taxpayers filing jointly. The phase-out thresholds are $1,252,700 for married taxpayers filing a joint return and $626,350 for all other taxpayers. (Once your income for the AMT hits the phase-out threshold, your AMT exemption begins to phase out at 25 cents for every dollar over the threshold.)  

Estate Tax Exemption is Even Higher

The estate and gift tax exemption, which is indexed to inflation, rose to $13,990,000 for 2025. But the now-higher exemption is set to expire at the end of 2025, meaning it could be essentially cut in half at that time if Congress doesn't act.

The annual gift exclusion, which allows you to give money to your loved ones each year without incurring any tax liability or using up any of your lifetime estate and gift tax exemption, increases to $19,000 per recipient.

New Tax Threshold on Capital Gains

Capital gains taxes are levied on the sale of capital assets, such as stocks, bonds, valuable items like jewelry and real estate. For the 2025 tax year, individual tax filers will not have to pay any capital gains tax if their total taxable income is $48,350 or less. That’s an increase from the income threshold of $47,025 in 2024. The capital gains tax rate jumps to 15% if your income is $48,351 to $533,400. If your income is higher than that, you’ll pay 20% in capital gains if you sell your investments.

Annual Exclusion of Gifts Increase

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

Conclusion

The Chugh, LLP accounting team will continue to monitor all new tax rules, regulations, and laws and keep their clients informed of any changes. For more information, please visit our website or contact the trusted Chugh, LLP accountants.