IRS Announces 2025 Income Tax Bracket Limits
Inflation has eased a bit over the past year, the IRS’ adjustment to the income tax brackets for 2025 is lower than it has been the past couple of years, by ~2.8%, compared with 5.4% for 2024 and 6.6% for 2023, based on the consumer price index (CPI).
Income Tax Brackets – 2024 – 2025:
| Income Thresholds | ||||
| Individuals | Married Filing Jointly | |||
| Income Tax Rate | 2024 | 2025 | 2024 | 2025 |
| 37% | $609.351 | $626,351 | $731,201 | $751,601 |
| 35% | $243,726 | $250,526 | $487,451 | $501,051 |
| 32% | $191,951 | $197,301 | $383,901 | $394,601 |
| 24% | $100,526 | $103,351 | $201,051 | $206,701 |
| 22% | $47,151 | $48,476 | $94.301 | $96,951 |
| 12% | $11,601 | $11,926 | $23,201 | $23,851 |
| 10% | $11,600 or less | $11,925 or less | $23,200 or less | $23,850 or less |
Standard Deduction:
The standard deduction is also increased—for individuals, to $15,000 for 2025 from $14,600 for 2024; for married joint filers, to $30,000 for 2025 from $29,200 for 2024. Taxpayers over age 65 can claim an additional standard deduction of $2,000 for single filers and $1,600 per qualifying spouse for married joint filers, up from $1,950 and $1,550, respectively, in 2024.
Gift & Estate Exclusions:
The annual gift tax exclusion will rise in 2025 to $19,000 from 2024’s $18,000 limit.
The estate tax threshold will increase in 2025 to $13,990,000 per individual from $13,610,00 in 2024.
Alternative Minimum Tax:
The Alternative Minimum Tax (AMT) exemption for 2025 is increased to $88,100 for individuals from $85,700 in 2024 and to $137,000 from $133,300 in 2024 for married couples filing jointly. Phase-out begins at $626,350 for individuals and $1,252,700 for married joint filers, compared with $609,350 and $1,218,700 in 2024.
Final Thoughts:
Of course, these are only some of the significant changes the IRS has announced for 2025. Most tax credit limitations have been increased for 2025, though some items are not, by statute, indexable to inflation.
In addition, if you itemize, we want to remind you that one of the provisions of 2017’s Tax Cuts and Jobs Act (TCJA) was to remove the limitation on itemized deductions. Please take advantage of this lesser-known benefit while it lasts!
There may be additional opportunities to leverage these increases to keep even more of your hard-earned money – consult with your virtual CFO or financial planner to develop the best strategy (or strategies) for you and your family.
If you are interested in developing new tax planning and estate strategies for 2025 or updating your existing plans, please click here to email us directly helping you is our mission!
Until next time —
Peace,
Eric