As 2025 approaches, the IRS has announced inflation-adjusted changes that will impact individual and family tax filings in 2026. From adjusted standard deductions to expanded credits and benefit limits, here’s a breakdown of the most significant updates that could affect your tax plans.
1. Increased Standard Deductions
For 2025, standard deductions have increased to help offset rising living costs:
- Single and Married Filing Separately: $15,000 (up by $400 from 2024)
- Married Filing Jointly: $30,000 (up by $800 from 2024)
- Head of Household: $22,500 (up by $600 from 2024)
2. Marginal Tax Rate Adjustments
The top tax rate of 37% remains unchanged for single filers with incomes above $626,350 and for joint filers above $751,600. Here are the income thresholds for other brackets:
- 35%: Over $250,525 for single filers, $501,050 for joint filers
- 32%: Over $197,300 for single filers, $394,600 for joint filers
- 24%: Over $103,350 for single filers, $206,700 for joint filers
- 22%: Over $48,475 for single filers, $96,950 for joint filers
- 12%: Over $11,925 for single filers, $23,850 for joint filers
- 10%: Up to $11,925 for single filers, $23,850 for joint filers
3. Alternative Minimum Tax (AMT) Exemptions
To offset the AMT burden, exemption limits have also risen:
- Single Filers: $88,100, phased out at $626,350
- Married Filing Jointly: $137,000, phased out at $1,252,700
4. Boosted Earned Income Tax Credit (EITC)
For taxpayers with three or more qualifying children, the maximum EITC is now $8,046, up from $7,830 in 2024. Phase-out thresholds vary depending on filing status and number of children.
5. Adjustments for Benefits and Contributions
Several benefit-related limits have increased:
- Qualified Transportation Fringe Benefit: Monthly cap rises to $325 (up from $315)
- Health Flexible Spending Arrangement: Contribution limit is now $3,300, with a carryover maximum of $660
- Medical Savings Accounts (MSA): Self-only coverage deductible range is $2,850 to $4,300; family coverage range is $5,700 to $8,550
6. Foreign Earned Income Exclusion
Taxpayers working abroad can now exclude up to $130,000 of foreign earned income, up from $126,500 in 2024.
7. Estate and Gift Tax Updates
- Estate Tax Exclusion: Increased to $13,990,000 for decedents in 2025
- Annual Gift Exclusion: Rises to $19,000 per recipient, up from $18,000
8. Adoption Credit Increase
The adoption credit for children with special needs now covers expenses up to $17,280, up from $16,810 in 2024.
Items Unchanged for 2025
Certain items remain consistent due to statutory provisions:
- Personal Exemptions: Remain at $0 (eliminated in 2017)
- Itemized Deduction Limits: No cap on itemized deductions, as per the 2017 Tax Cuts and Jobs Act
- Lifetime Learning Credit: Income thresholds remain at $80,000 for single filers, $160,000 for joint filers
For a detailed list of all 2025 tax updates, refer to Revenue Procedure 2024-40.