IRS Just Released NEW Inflation TAX Bracket 2025
The IRS has announced new tax brackets for 2025, adjusted by 2.8% to account for inflation. Here’s a breakdown of the key points:
0:00 Tax Brackets for 2025
1. 10% Bracket: Income up to $1,925 (single filer) is taxed at 10%. For example, if you make $10,000, the first $1,925 is taxed at 10%, totaling $192.5 in tax. Any income above $1,925 will fall into the next bracket.
2. 12% Bracket: Any income above $1,925 and up to approximately $48,405 will be taxed at 12%.
3. Higher Brackets: The percentage increases gradually with higher income, reaching the top rate of 37%.This adjustment means more of your income will fall into lower tax brackets, as the IRS raised income thresholds by 2.8% to reflect inflation. For example, the 10% threshold moved from $1,600 to $1,925.
1:04 Standard Deduction Adjustments
Single Filers: Increased from $14,600 to $15,000.
Married Filing Jointly: Increased from $29,200 to $30,000.
1:16 Gift Tax Exclusion and Other Changes
Tax-Free Gifts: Increased from $18,000 to $19,000. Retirement Account Contribution Limits: Updates are pending.
1:26 Not Adjusted for Inflation
Some tax credits and deductions remain unchanged, which could impact taxpayers despite inflation:
Child Tax Credit: Still $2,000. State and Local Tax Deduction (SALT): Capped at $10,000. Capital Loss Deduction: Limited to $3,000. These non-adjusted items mean that inflation doesn’t provide any relief for those deductions and credits, which some might find unfair. Let me know what you think about these changes and if they adequately address inflation impacts. Thank you for your support!
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