Frost Law
Revenue Procedure 2024-40 announced inflation adjustments for the 2025 tax year, affecting tax brackets, standard deductions, and other key thresholds.
The standard deduction for single filers and married individuals filing separately will increase to $15,000, up from $14,600 in 2024. Married couples filing jointly will see their standard deduction rise to $30,000, an $800 increase from the previous year. Heads of household will have a standard deduction of $22,500, up from $21,900.
All individual income tax brackets increased, and the top rate of 37% will affect single filers with taxable income above $626,350 and married couples above $751,600.
For long-term capital gains, the 0% rate applies to single individuals with taxable income up to $48,350 and married couples filing jointly up to $96,700. The 15% rate applies to taxable income up to $533,400 for single individuals and $600,050 for married couples. Above these thresholds, the rate rises to 20%. In addition, taxpayers with adjusted gross income exceeding $200,000 (or $250,000 if filing jointly) pay an additional 3.8% surtax on long-term capital gains.
The unified estate and gift tax exclusion for estates of decedents who die in 2025 will be $13,990,000, up from $13,610,000 in 2024. In addition, the annual gift exclusion will increase to $19,000 per recipient, rising from $18,000 in 2024.
Additionally, Notice 2024-80 announced that the 401(k) plan contribution limit will increase to $23,500 in 2025, up from $22,500 in 2024. However, the contribution limit for traditional and Roth IRAs remains at $7,000, with an additional $1,000 catch-up contribution for those 50 and older.
Other retirement accounts, such as SIMPLE and SEP IRAs, also saw upward adjustments in the maximum contribution amounts. These changes allow individuals to save more for retirement, with higher contribution caps helping offset inflation impacts.
If you’d like to discuss the 2025 tax bracket changes contact our team at (410) 497-5947 or schedule a consultation.
Revenue Procedure 2024-40 announced inflation adjustments for the 2025 tax year, affecting tax brackets, standard deductions, and other key thresholds.
The standard deduction for single filers and married individuals filing separately will increase to $15,000, up from $14,600 in 2024. Married couples filing jointly will see their standard deduction rise to $30,000, an $800 increase from the previous year. Heads of household will have a standard deduction of $22,500, up from $21,900.
All individual income tax brackets increased, and the top rate of 37% will affect single filers with taxable income above $626,350 and married couples above $751,600.
For long-term capital gains, the 0% rate applies to single individuals with taxable income up to $48,350 and married couples filing jointly up to $96,700. The 15% rate applies to taxable income up to $533,400 for single individuals and $600,050 for married couples. Above these thresholds, the rate rises to 20%. In addition, taxpayers with adjusted gross income exceeding $200,000 (or $250,000 if filing jointly) pay an additional 3.8% surtax on long-term capital gains.
The unified estate and gift tax exclusion for estates of decedents who die in 2025 will be $13,990,000, up from $13,610,000 in 2024. In addition, the annual gift exclusion will increase to $19,000 per recipient, rising from $18,000 in 2024.
Additionally, Notice 2024-80 announced that the 401(k) plan contribution limit will increase to $23,500 in 2025, up from $22,500 in 2024. However, the contribution limit for traditional and Roth IRAs remains at $7,000, with an additional $1,000 catch-up contribution for those 50 and older.
Other retirement accounts, such as SIMPLE and SEP IRAs, also saw upward adjustments in the maximum contribution amounts. These changes allow individuals to save more for retirement, with higher contribution caps helping offset inflation impacts.
If you’d like to discuss the 2025 tax bracket changes contact our team at (410) 497-5947 or schedule a consultation.
