2025 Tax Brackets Update

The Internal Revenue Service released the updated income tax brackets, standard deduction, and retirement contribution limits for the 2025 tax year. The top rate remains 37%, but remember that 2017’s Tax Cuts and Jobs Act expires at the end of 2025. The expiration of the 2027 tax cuts is a bit of an open question and it remains to be seen what the next Congress and President Trump will cobble together. Stay tuned and we will keep you posted as legislation develops over the next few months.

Overall, more than 60 provisions have changed at the federal level. Here are a few of the most critical changes in the federal tax bracket and retirement contribution limit. 

Tax Bracket Inflation Adjustment
Overall, tax brackets have been adjusted upwards for 2025. This adjustment is based on the Consumer Price Index and primarily accounts for inflation.

Standard Deduction
The standard deduction has increased to $30,000 for married couples filing jointly, up $800 from the previous year. For single filers, this number increased by $400 to $15,000.

Marginal Rates
Marginal tax rate brackets are also increasing.

Gift Tax
The annual gift tax exclusion for 2025 is $19,000, an increase of $1,000 from the previous year.

Estate Tax Credit
Individuals receiving an inheritance in 2025 will be able to exclude $13,990,000 from federal taxation, up from $13,610,000 in the previous year. The combined exclusion amount for a couple will be just short of $28 Million for the upcoming year.