The Internal Revenue Service has unveiled the federal income tax brackets for 2025, which are adjusted for inflation.
For filing taxes next year on 2024 income, the standard deduction will increase to $30,000 for married couples and $15,000 for single taxpayers, the IRS announced Tuesday.
That marks a bump from the 2024 standard deduction of $29,200 and $14,600, respectively. The 2017 federal tax cuts included higher deductions that will sunset next year if Congress does not act on a tax break extension.
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Federal income tax brackets show how much you owe on each part of your taxable income. The standard deduction is simply subtracted from your income, and the remainder will be taxed at the following rates for 2025:
37% for individual filers with incomes over $626,350, or $751,600 for married couples filing jointly.
35% for incomes over $250,525, or $501,050 for married couples filing jointly.
32% for incomes over $197,300, or $394,600 for married couples filing jointly.
24% for incomes over $103,350, or $206,700 for married couples filing jointly.
22% for incomes over $48,475, or $96,950 for married couples filing jointly.
12% for incomes over $11,925, or $23,850 for married couples filing jointly.
10% for incomes $11,925 or less, or $23,850 or less for married couples filing jointly.
For a single person with a taxable income of $58,000, everything up to $11,925 would be taxed at 10%, everything between $11,926 and $48,475 would be taxed at 12%, and everything between $48,576 and $58,000 would be taxed at 22%.
After 2025, the lower tax rates enacted under the 2017 federal tax cuts — known as the Tax Cuts and Jobs Act — will expire without action from Congress.
An expiration would revert to the 2017 federal rates of 10%, 15%, 25%, 28%, 33%, 35% and 39.60%.
Credits, deductions, exclusions
The lifetime estate tax credit — estates of those who died in 2024 — increases to $13,990,000. Gifts under $19,000 are tax-free, up from $18,000 in 2024. The earned income tax credit — aimed at low- and moderate-income working families with three or more children — will be $8,046, up from $7,830 in 2024.
Meanwhile, the alternative minimum tax exemption is increasing to $88,100 for individual filers — which is up $2,400 from 2024 — while it’s $68,650 for married individuals filing separately. The exemption for individual tax filers will phase out at $626,350.
For married couples filing jointly, the exemption begins at $137,000 and begins to phase out at $1,252,700.
“An alternative minimum tax places a floor on the percentage of taxes that a filer must pay to the government, no matter how many deductions or credits the filer may claim,” said a post by Investopedia.
What will stay the same next year?
Personal exemptions will stay at 0, as they have been since 2018 under the Trump federal tax cuts. No current itemized deductions will be eliminated.
The adjusted gross income used by taxpayers to determine their reduction under the Lifetime Learning Credit — which reduces your taxes to offset education costs — will remain unchanged. It’s currently phased out for taxpayers earning a gross income of $80,000 individually, or $160,000 for a joint return.
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
