Important points
- The IRS has adjusted your 2025 tax bill to reflect inflation and increased the amount of the standard deduction and several other items.
- Some individuals with 401(k) accounts may be able to make larger contributions in 2025. Additional contributions for individuals aged 60 to 63 will also increase next year.
- New rules and contribution limits for health insurance plans will be updated in 2025, and experts recommend looking back at your 2024 tax situation to properly plan for next year.
You may have just started thinking about your 2024 taxes due next April, but the Internal Revenue Service (IRS) has already announced changes for the 2025 tax year that will affect how you file your 2026 tax return.
Here's how the 2025 changes compare to the current rules:
How do tax brackets and standard deductions change?
To keep up with inflation, the IRS has increased the standard deduction, alternative minimum tax (AMT), earned income tax credit, and other amounts.
In 2025, the standard deduction will increase by $400 to $15,000 for single filers and married couples filing separately, and $30,000 for married couples filing jointly. The AMT exemption threshold for unmarried taxpayers increases from $85,700 to $88,100, and for married taxpayers it increases by $3,700 to $137,000. The earned income tax credit will also increase by $216.
Taxes were also adjusted so that taxpayers pay the same percentage of their income regardless of changes in inflation. Your income won't be taxed at a higher rate unless there's a 2.8% increase next year.
Some people may be able to contribute more to their retirement plans next year.
Individuals with 401(k) accounts will be able to contribute an additional $500 to their retirement plans due to increased contribution limits, but the limits for Individual Retirement Accounts (IRAs) will remain the same.
Catch-up contribution limits that allow individuals age 50 and older to make larger additional contributions to their retirement accounts remain unchanged. However, starting in 2025, individuals between the ages of 60 and 63 will be able to contribute up to $11,250, which is $3,750 higher than other catch-up contribution limits.
