The IRS has updated federal income tax brackets and standard deductions for 2025, impacting taxpayers filing returns in 2026. These changes reflect inflation and shift income thresholds across tax brackets.
For individuals, the top tax rate of 37% now applies to those earning over $626,350, while married couples filing jointly face this rate on income exceeding $751,600. In addition to these bracket changes, the IRS has adjusted capital gains thresholds, estate and gift tax exemptions, and eligibility for tax credits, such as the child tax credit.
Federal Income Tax Brackets for 2025
The new federal tax brackets determine the taxes owed based on portions of taxable income. Taxable income is calculated by subtracting either the standard deduction or itemized deductions from adjusted gross income.
The new tax brackets for 2025 are:
- 37% for individual income over $626,350 and joint incomes above $751,600.
- 35% for incomes above $250,525 for individuals and $501,050 for married couples.
- 32% for individuals earning more than $197,300 and couples making over $394,600.
- 24% for incomes over $103,350 for individuals and $206,700 for married couples.
- 22% for individuals earning more than $48,475 and couples making over $96,950.
- 12% for incomes over $11,925 for individuals and $23,850 for married couples.
- 10% for individuals earning $11,925 or less and couples making $23,850 or less.
If Congress takes no action, tax rates enacted under President Donald Trump’s 2017 Tax Cuts and Jobs Act (TCJA) will expire after 2025. Without an extension, tax brackets will return to their pre-2017 levels, which include rates of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
Higher Standard Deduction for 2025
Standard deductions will also rise in 2025. Married couples filing jointly can claim $30,000, up from $29,200 in 2024, while single filers will see an increase to $15,000, up from $14,600.
Like the tax brackets, these higher standard deductions resulted from the 2017 tax cuts, which are set to expire after 2025 unless Congress extends them.
Additional Adjustments
The IRS also adjusted long-term capital gains brackets, estate and gift tax exemptions, and provisions related to tax credits, such as the child tax credit. These changes ensure the tax code keeps pace with inflation and provides clarity for taxpayers.
The 2025 adjustments could have significant impacts. Taxpayers should be mindful of the potential changes in their tax liability and plan accordingly to avoid any surprises when filing returns in 2026.
