Every year, changes to the tax laws in the US affect millions of people, and 2025 will be no different. The IRS has made a number of changes that will affect how taxes, deductions, and other important parts of filing are calculated.
The main reasons for these changes are inflation, new tax rates, and other things that try to keep the tax system fair and equal for everyone.
Some taxpayers may notice a big difference in the amount of taxes they have to pay or get back in 2025 because of the big changes to taxes.
To be ready for tax season and to make sure you do not miss out on any deductions or credits you may be eligible for, you need to know about these changes. We will talk about the big changes and how they might affect your personal finances in this article.
There have been changes made by the IRS in a number of areas. For US taxpayers, the most important changes are to income brackets, standard deductions, and the level of eligibility for some exemptions.
People need to know how these changes might affect their taxes so they can take the right steps to get the best return.
Changes to tax brackets and rates in 2025
The IRS said that the tax brackets would be updated, which is one of the most important changes. Because of inflation, tax rates are changed to reflect changes in how much things cost to live.
Because of these changes, taxpayers do not have to pay taxes on income that has been lost to inflation, which is what would have happened if these changes were not made. Here are the new tax brackets for 2025:
- 10%: Income up to $11,000 for individuals and $22,000 for married couples.
- 12%: Income from $11,001 to $44,725 for individuals and $22,001 to $89,450 for married couples.
- 22%: Income of $44,726 to $95,375 for individuals and $89,451 to $190,750 for married couples.
- 24%: Income of $95,376 to $182,100 for individuals and $190,751 to $364,200 for married couples.
- 32%: Income of $182,101 to $231,250 for individuals and $364,201 to $462,500 for married couples.
- 35%: Income of $231,251 to $578,100 for individuals and $462,501 to $693,200 for married couples.
- 37%: Income over $578,101 for individuals and $693,201 for married couples.
With these new tax brackets, if your income is in certain ranges, you will pay less tax than in the past. This is because the tax rates have been changed to account for the rise in income due to inflation.
Modification to standard deductions and exemptions
For 2025, the IRS has also made some big changes to personal exemptions and standard deductions. People can take fixed amounts out of their income before taxes are calculated.
These are called standard deductions. People will be able to deduct $14,600 from their taxes in 2025, while married couples will be able to deduct $29,200. This is more than the previous year, which helps taxpayers lower their tax base.
The exemptions for people who depend on you have also been changed. There will be an increase in the amount that people with children or other dependents can claim, which will lower their taxable income even more.
Impact on tax credits and other modifications by the IRS
People who pay taxes should know about changes to the tax credits as well as changes to the tax brackets and deductions.
In 2025, the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit will both get bigger, which could help families with low incomes.
People who get these credits can lower the amount of taxes they have to pay, and they might even get extra money back.
Also, the IRS has said that there will be new limits on how much you can put into retirement accounts like IRAs and 401(k).
In 2025, people under 50 will only be able to put $7,500 into an IRA, while people 50 and older will be able to put $9,500 into an IRA. The most you can put into a 401(k) is $22,500, and people over 50 can put in an extra $7,500.
To sum up, the changes to the fax machine in 2025 will make big differences that will help a lot of taxpayers, especially those with low to middle incomes.
But people in the US should stay up to date on these changes and make changes to their tax plans to get the most out of them and pay the least amount of taxes possible.
In this case, getting help from a tax expert can be helpful to make sure they fully benefit from the IRS tax changes.