The IRS has announced the annual inflation adjustments for more than 60 tax provisions for tax year 2025. This includes updates to tax rate schedules and other tax changes, as detailed in Revenue Procedure 2024-40 :
- The 2025 Standard Deduction is increased shown in the chart below
- The maximum Child Tax Credit is $2,000, with the refundable portion remaining at $1,700 (unchanged from 2024)
- The annual gift exclusion is $19,000 (up from $18,000)
- The Unified Credit Against Estate Tax for a decedent passing away in 2025 is $13,990,000 (up from $13,610,000, an increase of $380,000)
Also adjusted are the tax brackets for 2025, with the highest marginal rate at 37%, outlined below:
| Standard Deduction | 2025 | 2024 | 2023 |
| Married Filing Jointly | $30,000 | $29,200 | $27,700 |
| Head of Household | $22,500 | $21,900 | $19,400 |
| Single | $15,000 | $14,600 | $12,950 |
| 37% Rates starts when taxable income exceeds | 2025 | 2024 | 2023 |
| Married Filing Jointly | $751,600 | $731,200 | $693,750 |
| Head of Household | $626,350 | $609,350 | $578,100 |
| Single | $626,350 | $609,350 | $578,125 |
2025 Inflation Adjustments for Retirement
By staying informed about the latest inflation figures, it’s possible to estimate the inflation indexing adjustments ahead of the IRS’s usual announcement in November:
- 401(k) employee maximum contribution for 2025 is $23,500 (up from $23,000 in 2024)
- $7,500 catch-up contribution for taxpayers aged 50 and over, remains unchanged.
- IRA contribution limit is $7,000 (remains unchanged from 2024)
- $1,000 catch-up contribution is unchanged for taxpayers aged 50 and over.
- SEP contribution limit of $70,000 (increased from $69,000 in 2024)
- SIMPLE contribution limit of $16,500 (increased from $16,000 in 2024)
- $3,500 catch up contribution is unchanged.
- ROTH IRA phase out limits for taxpayer MAGI of:
- Single/Head of Household: $150,000 to $165,000 (up from $146,000 to $161,000 in 2024)
- Married Filing Jointly: $236,000 to $246,000 (up from $230,000 to $240,000 in 2024)
- Married Filing Separately: Remains at $0 to $10,000 (not subject to cost-of-living adjustments)
2025 Cost-of-Living Adjustments (COLA) for Social Security
- 2.57% increase to Social Security and SSI benefits for 2025
- The maximum amount of earnings/wages subject to the Social Security tax (taxable maximum) will increase to $176,100 ( up from 168,600 in 2024)
- More of these benefits may be subject to tax because the taxable thresholds are not adjusted for inflation
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