The following describes changes that will apply to Federal Income Tax Returns filed starting during the 2026 tax season for 2025 tax return.
- Standard Deduction. – For single and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, which is an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000 an increase of $800 from 2024. Head of households, the standard deduction increases to $22,500 which is an increase of $600 from 2024.
- THE MARGINAL TAX RATES are as follows:
- Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
- 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
- 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
- 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
- 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
- 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
- 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
- Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
- Alternative minimum Tax Amount: The amount of the exemption in 2025 for unmarried individuals increases to $88,100 and phases out at $626,350. Those filing married jointly enjoy an exemption amount increase of $137,000 and phase out beginning at $1,252,700.
- Qualified transportation fringe benefit: The new monthly limitation for qualified transportation fringe benefit and for qualified parking has risen to $325 from $324 in 2024.
- Health flexible spending cafeteria plans: The new dollar limitation for employee salary reductions to health flexible spending arrangements has now increased to $3300. For Cafeteria plans that allow the carryover of unused amounts, the maximum carryover amount is now $660.
- Medical Savings Accounts:
a) Participants who have self-only coverage must have an annual deductible that is not less than $2850, but not more than $4300.
b) The maximum out-of-pocket expense is now at $5700 up from $5500
c) For family coverage, the annual deductible cannot be less than $5700 and not more than $8550. For family coverage, the out-of-pocket expense limit is $10,500. - Foreign earned income exclusion: This has increased to $130,000 from $126, 500.00.
- Estate Tax Credits: Those decedents who pass in 2025, have now basic exclusion amount of $13,990,000.
- Annual Exclusion for Gift Increase: The new Annual Gift tax exclusion has risen to $19,000 for 2025 from $18000 for 2024.
- Adoption Credits: The maximum credit allowed for 2025 for the adoption of a child with special needs is the amount of the actual adoption expenses up to $17,280.00.
Above is a summary at the time of reviewing and drafting the IRS releases. There still remains the unresolved Tax Cuts and Jobs Act (TCJA) of 2017 that will be reviewed again in 2025 as many of its provisions will expire unless renewed. Please check back to this website for updates on this issue.
Source: IRS.gov/newsroom/irs-releases-tax-inflation-adjustments-for tax-year-2025