8 Tax Changes Coming In 2025 That Will Impact Everyone

Some people may think of the IRS as a dusty old institution — its roots stretch back more than 160 years, after all — but the agency is quite nimble when it comes to making tax adjustments.

Each year brings new tax rules, even if they aren’t always sweeping reforms. A host of tax tweaks are coming for 2025 that will impact nearly everyone. So, keep these changes in mind if you want to make smart money moves in the new year.

Changes to income tax brackets appear every year. For 2025, tax brackets are getting a nudge upward.

The rates are:

• 37% for incomes over $626,350 | $751,600 for married couples who file jointly
• 35% for incomes over $250,525 | $501,050 for married couples
• 32% for incomes over $197,300 | $394,600 for married couples
• 24% for incomes over $103,350 | $206,700 for married couples
• 22% for incomes over $48,475 | $96,950 for married couples
• 12% for incomes over $11,925 | $23,850 for married couples
• 10% for incomes $11,925 or less | $23,850 or less for married couples

For the 2025 tax year, single filers and married individuals filing separately will see their standard deduction increase to $15,000, up $400 from 2024.

Married couples filing jointly will have a standard deduction of $30,000, reflecting an $800 rise from the previous year.

For heads of households, the standard deduction will climb to $22,500 in 2025, representing a $600 increase compared to 2024.

If you’re a big fan of socking away money for your retirement — and you really should be — here’s some good news for you: The IRS is going to let you contribute more.

For 401(k)s, the amount you can contribute is getting a bump from $23,000 to $23,500. Other savings plans, 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan, are getting the same increase.

In case you weren’t aware, a catch-up contribution is an additional amount of money that workers 50 or older can contribute to certain retirement savings accounts. The idea behind it is to give older workers a chance to literally catch up on their retirement savings.

The standard catch-up contribution for those 50 and older remains $7,500 in 2025 for those participating in most 401(k), 403(b), governmental 457 plans, and the federal Thrift Savings Plan.

However, workers who are 60, 61, 62 and 63 will be able to supersize their catch-up contribution in 2025. Their contribution limit will be $11,250.

Health savings accounts (HSAs) and flexible spending accounts (FSAs) will have higher contribution limits next year, making it easier for people to save for medical expenses in a tax-advantaged way.

HSAs are available to people with a high-deductible health plan. For 2025, your HSA contribution limit is getting a raise to $4,300 for single folks (up from $4,150) and $8,550 for families (up from $8,300).

The FSA is an employee benefit that many companies offer. The FSA contribution limit has been increased to $3,300, up from $3,200.

For anyone who shuffles off this mortal coil in 2025, the basic estate tax exclusion amount will rise to $13,990,000, which is up from $13,610,000 in 2024. That means federal estate taxes will not be owed on estates up to that dollar total.

The gift tax exclusion also is increasing to $19,000 per recipient for 2025, which is up from $18,000 in 2024. That means you can give up to $19,000 per person without triggering gift taxes.

The Earned Income Tax Credit (EITC) isn’t available to everyone, but it can be a tremendous boon for low-income and moderate-income families.

For those with three or more qualifying children, the maximum EITC for 2025 is $8,046, up from $7,830 in 2024.

The adoption credit will become more generous in 2025.

The maximum adoption credit for a child with special needs will be $17,280, up from $16,810 in 2024. The goal is to help cover qualified adoption expenses, which include fees, court costs, and travel expenses.

The IRS makes adjustments to your taxes every year, and it is important to pay attention to them if you want to get ahead financially.

Not everything is being modified in 2025, but the IRS has introduced a number of key changes. The more you know about what is new in the tax code, the better your finances will likely look.