As we approach January and with inflation continuing to affect Americans’ finances, taxpayers nationwide are gearing up to file their taxes for 2025. To facilitate this process, the Internal Revenue Service (IRS) announces annual inflation adjustments, encompassing over 60 tax provisions. Last year, the IRS disclosed figures for the 2024 tax year, prompting taxpayers to pay special attention to standard deduction changes. For single filers and married individuals filing separately, the standard deduction rose to $14,600, up by $750 from 2023. Married couples filing jointly saw an increase to $29,200, up by $1,500 from the previous year. Additionally, the standard deduction for the head of household rose by $1,100 to $21,900 for the 2024 tax year.
Here are some other key changes to keep in mind for the upcoming tax season:
– IRS tax rates for 2024:
37% – Single income over $609,350 and married couples filing jointly with income over $731,200
35% – Single income over $243,725 and married couples filing jointly with income over $487,450
32% – Single income over $191,950 and married couples filing jointly with income over $383,900
24% – Single income over $100,525 and married couples filing jointly with income over $201,050
22% – Single income over $47,150 and married couples filing jointly with income over $94,300
12% – Single income over $11,600 and married couples filing jointly with income over $23,200
10% – Single income of $11,600 or less and married couples filing jointly with income less than $23,200
– Tax exemptions and credits:
The alternative minimum tax (AMT) exemption for 2024 increased to $85,700, with phase-out starting at $609,350. For married couples filing jointly, the exemption amount increased to $133,300, with phase-out beginning at $1,218,700. The maximum Earned Income Tax Credit amount for 2024 is $7,830 for taxpayers with three or more qualifying children.
– Health savings account contributions:
In 2024, the limit for employee health savings account contributions will rise to $3,200. For those with self-only coverage in a medical savings account, the maximum out-of-pocket expense amount will be $5,550, up by $250 from 2023. Family coverage will have an out-of-pocket expense limit of $10,200, an increase of $550 from the previous year.
As for tax year 2025, the IRS released information in October regarding potential changes that may impact taxpayers.
In the tax year 2025, or when individuals file their taxes starting in January 2026, there are notable changes that taxpayers should be aware of. These changes include adjustments in the standard deduction amounts for various filing statuses. The Internal Revenue Service (IRS) has announced that for single taxpayers and married individuals filing separately, the standard deduction will see an increase to $15,000, which is $400 higher than the previous year. Married couples filing jointly can expect a standard deduction of $30,000, reflecting an $800 increase. Additionally, heads of households will see their standard deduction rise to $22,500, a $600 bump from the previous year.
Income tax brackets for different filing statuses have also been revised by the IRS. For singles and married couples filing jointly, the following brackets have been set:
– 37% tax rate applies to single individuals with incomes over $626,350 and married couples filing jointly with incomes exceeding $751,600.
– 35% tax rate is for single taxpayers with incomes surpassing $250,525 and married couples filing jointly with incomes over $501,050.
– 32% tax rate applies to single individuals earning more than $197,300 and married couples filing jointly with incomes above $394,600.
– 24% tax rate is for single taxpayers with incomes over $103,350 and married couples filing jointly with incomes over $206,700.
– 22% tax rate is for single individuals with earnings exceeding $48,475 and married couples filing jointly with incomes surpassing $96,950.
– 12% tax rate applies to single taxpayers with incomes over $11,925 and married couples filing jointly with incomes over $23,850.
– 10% tax rate applies to single individuals with incomes of $11,925 or below and married couples filing jointly with incomes less than $23,850.
In addition to these changes, the IRS has also adjusted the maximum Earned Income Tax Credit (EITC) amount for qualifying taxpayers with three or more qualifying children. The new maximum EITC amount will be $8,046 for the tax year 2025, showing an increase of $216 from the previous year.
For those seeking more information about tax changes and updates, Saleen Martin, a reporter on USA TODAY’s NOW team, provides valuable insights. Saleen hails from Norfolk, Virginia, famously known as the 757 area. For further updates and discussions on tax-related matters, you can follow Saleen on Twitter at @SaleenMartin or contact her via email at sdmartin@usatoday.com.
This detailed article originally appeared on USA TODAY and covers important information regarding the income tax brackets for the years 2024 and 2025. It is crucial for taxpayers to stay informed about these changes to ensure accurate and timely filing of their taxes.
