2025 IRS Tax Changes: What You Need to Know

The new year brings new tax brackets, deductions and limits that will impact your 2025 federal income tax return. Changes to the IRS tax code affect taxpayers across income levels and will change how much you owe or your refund amount. For 2025, the agency has announced annual inflation adjustments, which could impact income tax brackets, standard deductions, estate and gift taxes, retirement contributions and other key provisions. These changes will affect taxpayers when they file returns in 2026.

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2025 Tax Changes You Need to Know

The five major 2025 tax changes cover income tax brackets, the standard deduction, retirement contribution limits, the gift tax exclusion and phase-out levels for Individual Retirement Account (IRA) deductions, Roth IRAs and the Saver’s Credit. This annual inflation adjustment ensures that taxpayers aren’t bumped into higher brackets due to cost-of-living increases rather than pay raises.

While many adjustments are relatively minor, even small tweaks can add up to substantial savings or higher bills. For example, an upper-middle-class couple could bank over $1,000 more by making the most of increased 401(k) contributions and adjusting IRA deductibility planning.

Income Tax Brackets

The income brackets for marginal tax rates were adjusted to reflect inflation for 2025 returns. Here’s how they shake out:

Rate	Single Filers (Income Over)	Married Filing Jointly (Income Over)
10%	$0 – $11,925	$0 – $23,850
12%	$11,925 – $48,475	$23,850 – $96,950
22%	$48,475 – $103,350	$96,950 – $206,700
24%	$103,350 – $197,300	$206,700 – $394,600
32%	$197,300 – $250,525	$394,600 – $501,050
35%	$250,525 – $626,350	$501,050 – $751,600
37%	$626,350+	$751,600+

For a comparison, here are the 2024 brackets:

Rate	Single Filers (Income Over)	Married Filing Jointly (Income Over)
10%	$0 – $11,600	$0 – $23,200
12%	$11,600 – $47,150	$23,200 – $94,300
22%	$47,150 – $100,525	$94,300 – $201,050
24%	$100,525 – $191,950	$201,050 – $383,900
32%	$191,950 – $243,725	$383,900 – $487,450
35%	$243,725 – $609,350	$487,450 – $731,200
37%	$609,350+	$731,200+

Standard Deductions

The standard deduction has increased for tax year 2025, reducing taxable income for most filers:

Single filers and married individuals filing separately: $15,000, an increase of $400 from 2024
Married couples filing jointly: $30,000, an increase of $800 from 2024
Heads of household: $22,500, an increase of $600 from 2024

Contribution Limits for Retirement Plans

The most an employee can contribute to a 401(k) plan in 2025 will be $23,500, a $500 increase from 2024. Additionally, employees aged 50 and older can add an extra $7,500, bringing their total contribution limit to $31,000. This limit also applies to 403(b) and most 457 plans, as well as the Thrift Savings plan for federal employees.

For people with individual retirement accounts, the limit remains at $7,000. The IRA catch-up contribution limits to retirement plans for people aged 50 and over were not changed from 1,000.

Gift Tax Limit

The amount of the annual exclusion for gifts rises $1,000 for 2025, from $18,000 to $19,000.

Tax Credit and Deduction Changes

In 2025, mostly higher income ranges will be used to determine a taxpayer’s eligibility to deduct IRA contributions, contribute to Roth IRAs and claim the Saver’s Credit. Here are details:

Ranges for phasing out IRA contribution deductibility apply based on filing status and whether the taxpayer or a spouse is covered by a workplace retirement plan as follows:

Filing Status and Coverage	Phase-Out Range	Change
Single taxpayer covered by workplace retirement plan	$79,000 and $89,000	Up from $77,000 and $87,000
Married people filing jointly covered by workplace retirement plans	$126,000 and $146,000	Up from $123,000 and $142,000
Single taxpayer not covered by workplace retirement plan but married to someone who is covered	$236,000 and $246,000	Up from $230,000 and $240,000
Married filing separately not covered by a plan	$0 and $10,000	No change

Roth IRA contributions are also subject to income-based phase-outs and most of those ranges increased in 2025 as well. Phase-out ranges vary based on filing status as follows:

Filing Status	Phase-Out Range	Change
Single and head of household	$150,000 and $165,000	Up from $146,000 and $161,000
Married filing jointly	$236,000 and $246,000	Up from $230,000 and $240,000
Married filing separately	$0 and $10,000	No change.

The income limit for the Saver’s Credit is based on based on filing status and is adjusted as follows:

Filing Status	Income Limit	Change
Single and married filing separately	$39,500	Up from $38,250
Married filing jointly	$79,000	Up from $76,500
Head of household	$59,250	Up from $57,375

Bottom Line

A tax payer researches tax changes for 2025.

The 2025 tax adjustments made by the IRS to income tax brackets, the standard deduction, retirement savings limits, and phase-outs will collectively impact taxpayers across income levels. While many of the specific changes are relatively small inflation adjustments, they add up to real impacts on your tax bill or refund. As with every tax year, it pays to be aware of any changes that are relevant to your specific tax scenario.

Tax Planning Tips

Meeting with a financial advisor can help you gain a better understanding of taxes within the context of a financial planning picture. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
SmartAsset’s federal income tax calculator is updated with each year’s changes in time for you to file your next return.