IRS 2025 Tax Brackets: What to Expect and How Much You Have to Pay?

IRS 2025 Tax Brackets: People in the US might get some tax breaks in 2025, but they won’t be as big as in previous years. Experts think that the IRS will raise tax rates by 2.8% to account for inflation. Any tax cut is good, but this increase isn’t as big as the ones that will happen in 2024 and 2023, which will be 5.4% and 7.1%, respectively.

To stop “bracket creep,” the IRS changes the tax brackets. This is when inflation moves people into higher tax brackets even though their real standard of living hasn’t changed.

“The IRS adjusts a host of tax elements each year for inflation,” explains Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “Otherwise, as people march through life and get raises for inflation, they could get pushed into higher tax brackets, and that would undercut any benefit from the raise.”

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The chained Consumer Price Index (CPI), which reflects shifts in consumer spending patterns and tracks inflation more precisely than the standard CPI, serves as the basis for the tax bracket adjustments. Wolters Kluwer and Bloomberg Tax state that a declining inflation rate is the reason for the estimated 2.8% adjustment for 2025. Since 2022, when inflation reached a 40-year high, the rate has significantly decreased.

IRS 2025 Tax Brackets will increase by 2.8%

While the tax rates will remain unchanged, ranging from 10% to 37%, the income thresholds associated with each bracket will change. This implies that in order to pay taxes at the same rate as in prior years, you will have to earn more in 2025. For instance, a single filer making $48,000 in 2025 will only pay the top marginal rate of 12% in taxes, compared to a 22% rate in 2024. Your tax bill may change noticeably as a result of this.

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In 2025, some tax provisions, like the standard deduction, are expected to change. The standard deduction will likely increase to $30,000 for married couples filing jointly and $15,000 for single filers. This increase will allow people to protect more of their income from taxes, offering extra relief.

Though these changes won’t take effect until January 2025, it’s a good idea to plan ahead. Tax expert Steber advises using these projections to adjust tax strategies now. Taxpayers can consider changing their withholdings or contributing more to 401(k)s or IRAs to better prepare for next year’s taxes and avoid surprises.