The IRS has released updates for the 2025 tax year that will affect how much you pay in taxes when you file your returns in 2026. Here are the key changes:
Standard Deductions: More Money in Your Pocket
The standard deduction is the amount of income that’s not taxed. For 2025, the IRS is increasing the standard deduction to help you save more:
- Single filers: $15,000 (up by $400 from 2024)
- Married couples filing together: $30,000 (up by $800 from 2024)
- Heads of households: $22,500 (up by $600 from 2024)
This means if you file your taxes as one of these categories, you’ll be able to subtract more from your taxable income.
Tax Brackets: How Much You Pay Depends on Your Income
Your tax rate depends on how much money you earn. The IRS uses “tax brackets” to decide how much tax you should pay. Here’s how it will work for 2025:
| Tax Rate | Income Range for Single Filers | Income Range for Married Couples Filing Jointly |
|---|---|---|
| 37% | Over $626,350 | Over $751,600 |
| 35% | Over $250,525 | Over $501,050 |
| 32% | Over $197,300 | Over $394,600 |
| 24% | Over $103,350 | Over $206,700 |
| 22% | Over $48,475 | Over $96,950 |
| 12% | Over $11,925 | Over $23,850 |
| 10% | $11,925 or less | $23,850 or less |
This means if you’re single and earn less than $11,925, you pay only 10% of that in taxes. As you earn more, the tax rate goes up for the higher amounts of your income.
Other Key Changes to Note
Earned Income Tax Credit (EITC):
If you have children, you may qualify for the EITC, a tax credit that helps lower-income families. For 2025, families with three or more children can claim up to $8,046, an increase from 2024.
Qualified Transportation Fringe Benefit:
For jobs that provide benefits for parking or commuting, the monthly limit for 2025 has increased to $325, up from $315 in 2024.
Health Flexible Spending Accounts (FSA):
In 2025, you can contribute up to $3,300 to a health FSA, an increase from the 2024 limit of $3,200. These funds can be used for qualified health-related expenses.
Foreign Earned Income Exclusion:
For 2025, the amount of income earned outside the U.S. that can be excluded from taxation has risen to $130,000, up from $126,500 in 2024. This is particularly relevant for individuals working remotely or conducting business internationally, as it reduces the U.S. tax burden on foreign income.
Things That Won’t Change
- Personal Exemption: This remains at $0, as it was eliminated by the Tax Cuts and Jobs Act of 2017.
- Itemized Deductions: There is no longer a limit on the amount you can claim for itemized deductions, as the limit was also removed by the Tax Cuts and Jobs Act.
Why Does This Matter?
These changes mean you might pay less in taxes or get a bigger refund when you file in 2026. Understanding the new rules can help you plan ahead for next year’s taxes. But remember, everyone’s tax situation is different, so it’s always a good idea to talk to a tax professional to make sure you’re getting all the benefits you qualify for.
If you need personalized advice, consult a tax professional or visit the IRS website for more details.
Disclaimer:
This article provides a general overview of the 2025 tax updates based on information released by the IRS. Tax laws are complex, and individuals should consult a tax professional or the IRS directly for specific guidance.
