Each year, the IRS adjusts tax brackets to keep up with inflation. For 2025, these adjustments reflect a more moderate inflation rate, resulting in about a 2.8% increase across tax brackets. These updates will apply to the tax returns filed in 2026.
2025 Standard Deduction Updates
- Single Filers and Married Filing Separately: Standard deduction rises to $15,000 (a $400 increase).
- Married Filing Jointly: Standard deduction increases to $30,000 (an $800 increase).
- Heads of Household: Standard deduction goes up to $22,500 (a $600 increase).
Note: Seniors (age 65 and up) can add an extra $2,000 for single filers and $1,600 for those filing jointly.
2025 Marginal Tax Rates
The following tax rates apply for 2025 based on income level:
- 37% for incomes over $626,350 for single filers ($751,600 for married couples).
- 35% for incomes over $250,525 for single filers ($501,050 for married couples).
- 32% for incomes over $197,300 for single filers ($394,600 for married couples).
- 24% for incomes over $103,350 for single filers ($206,700 for married couples).
- 22% for incomes over $48,475 for single filers ($96,950 for married couples).
- 12% for incomes over $11,925 for single filers ($23,850 for married couples).
- 10% for incomes at or below $11,925 for single filers ($23,850 or less for married couples).
Note: Married individuals filing separately are taxed at the same rates as single filers.
2025 Earned Income Tax Credit (EITC) Adjustments
The EITC offers a refundable tax credit to low- and moderate-income workers:
- Three or more children: Maximum EITC rises to $8,046 (up from $7,830).
- Two children: Maximum EITC rises to $7,152 (up from $6,960).
- One child: Maximum EITC rises to $4,328 (up from $4,213).
- No children: Maximum EITC rises to $649 (up from $632).
For detailed thresholds and phase-out amounts, consult the IRS guidelines.
Other Tax Changes for 2025
- Estate Tax Exemption: Increased to $13,990,000 (up from $13,610,000 in 2024).
- Gift Tax Exclusion: Now $19,000 (up from $18,000 in 2024).
- Adoption Credit: Maximum credit rises to $17,280 for a child with special needs (up from $16,810).
Careful tax planning can help maximize your retirement income. For more personalized tax advice, consider speaking with a Federal Retirement Consultant who understands federal benefits.
