IRS Tax Brackets 2025: Standard Deduction and Inflation Adjustments Announced

The Internal Revenue Service has released the updated IRS tax brackets for 2025, raising the standard deduction and adjusting income thresholds to reflect inflation. The updates, detailed in Revenue Procedure 2024-40, apply to the tax year 2025 and will be used when taxpayers file tax returns in 2026.

The federal income tax rates remain unchanged at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. However, the tax brackets have been expanded upward to prevent taxpayers from being pushed into a higher tax bracket without real wage increases.

For single filers, the 10% rate applies to taxable income up to $11,925, while the top 37% marginal tax rate begins at $626,350. For married couples filing jointly, thresholds are generally double, with the top bracket starting at $751,600. These shifts ensure that more dollars earned are taxed at lower rates, preserving the progressive tax system.

Standard Deduction Increases

The standard deduction will rise in 2025, providing relief to most taxpayers who do not use itemized deductions.

• Single filers: $15,000 (up $400)
  
  
• Married filing jointly: $30,000 (up $800)
  
  
• Head of household: $22,500 (up $600)

Because nearly 90% of taxpayers take the standard deduction, these increases directly reduce total taxable income and help lower the effective tax rate. For many households, the changes will mean they pay tax on less of their income, even if gross wages rise slightly.

Alternative Minimum Tax and Credits

The alternative minimum tax (AMT) exemption rises to $88,100 for unmarried individuals and $137,000 for married couples filing jointly, with phase-outs beginning at higher levels of adjusted gross income. These increases prevent more middle-income taxpayers from being caught by the AMT.

Key credits and limits also move upward:

• The earned income tax credit (EITC) for families with three or more children will reach a maximum credit of $8,046, up from $7,830.
  
  
• The child tax credit stays at the maximum of $2,000 per qualifying child, but income phase-outs based on modified adjusted gross income still apply.
  
  
• The lifetime learning credit and other education-related provisions adjust to rising tuition and costs.
  
  
• The annual gift tax exclusion grows to $19,000, while the foreign earned income exclusion increases to $130,000.
  
  
• Retirement contribution limits for accounts such as a Simple IRA also rise.

Together, these changes ensure that credits and deductions keep pace with the cost of living and maintain fairness in the federal tax code.

Inflation Adjustments Keep Tax Brackets Aligned With Cost of Living

Since the 1980s, the IRS has adjusted annual inflation to avoid “bracket creep.” Without them, taxpayers could face higher tax bills even when their entire income only reflects inflation. These adjustments are essential to maintaining stability in the federal tax brackets and protecting household purchasing power.

Eliminating personal exemptions under the Tax Cuts and Jobs Act continues to shape current federal income tax brackets. That law also removed limits on itemized deductions and made structural changes to the federal income tax that remain in place through 2025.

How the 2025 Changes Affect Taxpayers

For most taxpayers, the 2025 adjustments mean slightly lower taxes or more room before moving into different brackets. Once the IRS issues new tables, employers will need to update payroll withholding.

Tax professionals note that filing status remains a key factor in tax planning. Married couples, head of household filers, and self-employed individuals should review how changes to ordinary income, tax deductions, and contribution limits affect their obligations. Those with education expenses may benefit from updated credits, while families with dependents should monitor eligibility for the child tax credit and income tax credit.

Experts caution that taxpayers should plan around income limits, particularly if their adjusted gross income puts them close to phase-out ranges for credits. Reviewing ordinary income, retirement contributions, and early withholding can help reduce surprises in April 2026 when tax returns are due.

Official Sources

Taxpayers can review the full details of more than 60 changes in Revenue Procedure 2024-40, the official document outlining the 2025 adjustments. The IRS has also provided a summary announcement in the IRS Newsroom, highlighting updates to the federal income tax brackets, standard deduction, and credits. Additional resources, including forms, tax tables, and guidance on filing status and federal income tax rates, are available on IRS.gov.