The Internal Revenue Service has released new income tax brackets for 2025 that account for changes in inflation.
The changes will go into effect for tax filings made in 2026.
The standard deduction will increase to $30,000 for married couples filing together, an increase of $800 from tax year 2024. The standard deduction will rise to $15,000, up $400, for single filers and $22,500, an increase of $600, for heads of households.
The top marginal tax rate will remain the same at 37% for individual single taxpayers with incomes of more than $626,350, or $751,600 for married couples filing jointly.
Other rates are:
- 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
- 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
- 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
- 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
- 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
- 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
Other changes:
Alternative minimum tax exemption amounts
For tax year 2025, the exemption amount for unmarried individuals will increase to $88,100 ($68,650 for married individuals filing separately) and begins to phase out at $626,350. For married couples filing jointly, the exemption amount increases to $137,000 and begins to phase out at $1,252,700.
Earned income tax credits
For qualifying taxpayers who have three or more qualifying children, the maximum Earned Income Tax Credit amount will go to $8,046, an increase from $7,830 from tax year 2024.
Qualified transportation fringe benefit
The monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking will increase to $325, up from $315 in 2024.
Health flexible spending cafeteria plans
The limitation for employee salary reductions for contributions to health flexible spending accounts rises to $3,300, increasing from $3,200 in tax year 2024. For cafeteria plans that allow users to carryover unused amounts, the maximum amount rises to $660, increasing from $640 in tax year 2024.
