2025 Inflation Adjustments Released

The IRS has released Revenue Procedure 2024-40, which provides detailed information on adjustments and changes to more than 60 tax provisions impacting returns filed in 2026. The 2025 adjustments include the following changes to the standard deduction:

• $15,000 for single taxpayers and married individuals filing separately, a $400 increase from 2024
• $30,000 for married couples filing jointly, an $800 increase from 2024
• $22,500 for heads of household, a $600 increase from 2024

Marginal tax rates for individual single taxpayers and married couples filing jointly for 2025 are:

• 37% for incomes greater than $626,350 ($751,600 for married couples filing jointly)
• 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)

Other notable changes:

• Earned income tax credit maximum: $8,046 for 2025, up from $7,830 for 2024
• Annual exclusion for gifts: $19,000, a $1,000 increase from 2024
• Estate tax basic exclusion amount: $13,990,000, up from $13,610,000 for decedents who died in 2024
• Dollar limitation for employee salary reductions for contributions to health flexible spending arrangements: $3,300, up $100 from 2024. For cafeteria plans permitting carryover of unused amounts, the maximum carryover is $660, up from $640 for 2024.

For more information regarding Revenue Procedure 2024-40, visit the IRS website, or contact a Trusted Advisor with questions at kerberrose.com/contact-us.