Buzz
The IRS has announced inflation adjustments for the 2025 tax year—affecting returns filed in 2026—impacting your tax bracket, standard deduction, and other key areas.
While tax rates will remain the same in 2025, the income thresholds for each bracket will rise due to inflation and "bracket creep," which can push taxpayers into higher brackets (or lessen the value of deductions and credits) without an actual income increase. However, tax rates might rise in 2026 unless the provisions of the 2017 Tax Cuts and Jobs Act that are set to expire are extended.
The 2025 adjustments are the smallest in recent years, at less than 3%.
2025 Income Tax Brackets
Here are the updated thresholds for single filers:
37% for incomes exceeding $626,350 (up from $609,350)
35% for incomes exceeding $250,525 (up from $243,725)
32% for incomes exceeding $197,300 (up from $191,950)
24% for incomes exceeding $103,350 (up from $100,525)
22% for incomes exceeding $48,475 (up from $47,151)
12% for incomes exceeding $11,925 (up from $11,600)
10% for incomes of $11,925 or below
For married couples filing jointly, here are the revised thresholds:
37% for incomes exceeding $751,600 (up from $731,200)
35% for incomes exceeding $501,050 (up from $485,450)
32% for incomes exceeding $394,600 (up from $383,900)
24% for incomes exceeding $206,700 (up from $201,050)
22% for incomes exceeding $96,950 (up from $94,300)
12% for incomes exceeding $23,850 (up from $23,200)
10% for incomes of $23,850 or below
Keep in mind that tax rates are applied marginally, meaning you don't pay the same rate on all of your income. For single filers, the initial $11,925 is taxed at 10% (equating to $1,192). The portion of income between $11,926 and $48,475 is taxed at 12%, and so forth.
Increase in standard deduction
In 2025, the IRS has announced a rise in the standard deduction to $15,000 for single filers (up from $14,600) and $30,000 for married couples filing jointly (up from $29,200). This deduction—claimed by about 90% of taxpayers—reduces taxable income, which may lower your tax burden or increase your refund. It may be worthwhile to itemize if your deductions exceed these limits.
Additional tax changes for 2025
There are a few other tax adjustments for the upcoming year that will affect certain filers.
For instance, the income thresholds for capital gains tax—applicable to profits made from the sale of appreciated assets—are increasing. Single filers earning up to $48,350 and married couples earning up to $96,700 will pay no tax on capital gains. For single filers with incomes between $48,350 and $533,400 (and between $96,700 and $600,050 for married couples), the tax rate is 15%. Those earning more than $533,400 ($600,050 for married couples) will face a 20% tax on their gains. Additionally, the estate tax exemption is increasing from $13.61 million to $13.99 million, while the tax-free gift amount is rising to $19,000, up from $18,000 in 2024.
The Earned Income Tax Credit for low- to moderate-income taxpayers will see an increase, rising from $632 to $649 for single filers. For households with three or more children, the maximum credit available will grow from $7,830 to $8,046.
