The IRS has just revealed updated federal income tax brackets and standard deductions for the 2025 tax year, impacting the returns that taxpayers will file in 2026.
These changes, which raise the income thresholds for each bracket, are part of the annual inflation adjustments. For individuals and married couples, the changes reflect an increase in how much income falls within each tax bracket, which could mean a lower tax bill for many.
New Federal Tax Brackets for 2025
This Article Includes
Here are the updated federal tax brackets for 2025, based on taxable income, which is calculated by subtracting either the standard or itemized deductions from your adjusted gross income:
- 37%: For individual taxpayers with incomes greater than $626,350, or married couples filing jointly earning over $751,600.
- 35%: For incomes over $250,525 for individuals, or $501,050 for married couples.
- 32%: For incomes over $197,300 for individuals, or $394,600 for married couples.
- 24%: For incomes over $103,350 for individuals, or $206,700 for married couples.
- 22%: For incomes over $48,475 for individuals, or $96,950 for married couples.
- 12%: For incomes over $11,925 for individuals, or $23,850 for married couples.
- 10%: For incomes up to $11,925 for individuals, or up to $23,850 for married couples.
These adjustments aim to account for inflation and help prevent “bracket creep,” where inflation pushes taxpayers into higher tax brackets even if their purchasing power hasn’t increased.
Standard Deduction Increase
In addition to the updated tax brackets, the IRS has also increased the standard deduction for 2025. This is the amount you can deduct from your income before calculating your taxable income.
- Married couples filing jointly: The standard deduction will rise to $30,000, up from $29,200 in 2024.
- Single filers: The deduction will increase to $15,000, up from $14,600 in 2024.
The higher standard deduction was introduced as part of the Tax Cuts and Jobs Act (TCJA) signed into law by former President Donald Trump in 2017. However, these higher deduction amounts will expire after 2025 unless Congress acts to extend them.
Other Key Adjustments
The IRS also made adjustments to other important tax provisions, including:
- Long-term capital gains brackets
- Estate and gift tax exemptions
- Eligibility for the child tax credit
These changes are meant to reflect the rising cost of living and ensure that taxpayers continue to receive fair benefits under the tax code.
What Happens After 2025?
If Congress does not take action, the lower tax rates introduced under the TCJA will expire after 2025. This would cause tax brackets to revert to the pre-2018 levels, with the highest tax rate returning to 39.6%. The standard deduction would also decrease, making tax planning for the coming years important for many taxpayers.
In summary, the IRS adjustments for 2025 mean that taxpayers may keep a little more of their income, thanks to higher tax brackets and standard deductions. However, with the potential for tax changes on the horizon in 2026, staying informed and planning ahead is more important than ever.
