IRS adjusts tax brackets for inflation ahead of 2025 tax year

The Internal Revenue Service released tax brackets adjusted for inflation before the 2025 tax year begins. Officials gave the standard deduction for single taxpayers a $400 bump, pushing it to $15,000. The standard deduction for joint filings got a $800 bump and reached $30,000. Standard deductions for household heads will also increase by $600, reaching $22,500 in 2025.

The applicability threshold for the highest tax rate jumped by about $17,000 for single filers and about $20,000 for couples filing jointly, meaning the top 37 percent rate now applies to single filers making $626,350 or more, and couples filing jointly earning more than $751,600. The lowest tax bracket rose by more than $300, now capped at $11,925 for single filers and $23,850 for married couples filing jointly. Filers over the age of 65 may also claim an extra standard deduction of $2,000 for single filers and $1,600 for joint filers. Officials also raised the 2025 maximum Earned Income Tax Credit to $645 to single or joint filers with no children, $4,328 for one child, $7,152 for two children, and $8,046 for three or more children.

What’s staying the same? Itemized deductions will continue to have no cap and personal exemptions will remain at zero, changes enacted under the 2017 Tax Cuts and Jobs Act. The income amounts for taxpayer reductions under the Lifetime Learning Credit will also remain the same, and is phased out for taxpayers with modified adjusted gross incomes over $80,000.

Dig deeper: Read my report about the inflation adjustments made last year that apply to the upcoming filing season.