With January just weeks away and inflation still impacting the wallets of Americans, taxpayers across the country are preparing to file in 2025.
To ease the transition, the Internal Revenue Service announces inflation adjustments each year, noting adjustments for more than 60 tax provisions.
The IRS released numbers for tax year 2024 last year, nudging most taxpayers to pay close attention to the standard deduction for single and married filers.
For single taxpayers and married individuals filing separately, the standard deduction rose to $14,600, up $750 from tax year 2023, the IRS reported. For married couples filing jointly for tax year 2024, the deduction increased to $29,200, up $1,500 from tax year 2023, the IRS said. The IRS noted that for the head of household, the standard deduction went up $1,100, totaling to $21,900.
Here are other changes to keep in mind during tax season.
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IRS tax rates for tax year 2024
The IRS announced tax rates for its seven tax brackets for tax year 2024:
- 37% – Single income over $609,350 and married couples filing jointly with income over $731,200
- 35% – Single income over $243,725 and married couples filing jointly with income over $487,450
- 32% – Single income over $191,950 and married couples filing jointly with income over $383,900
- 24% – Single income over $100,525 and married couples filing jointly with income over $201,050
- 22% – Single income over $47,150 and married couples filing jointly with income over $94,300
- 12% – Single income over $11,600 and married couples filing jointly with income over $23,200
- 10% – Single income of $11,600 or less and married couples filing jointly with income less than $23,200
Tax exemptions and credits
One change noted by the IRS relates to the alternative minimum tax exemption (AMT). Some tax benefits can significantly shrink a taxpayer’s regular tax amount. The AMT is applied to high-income taxpayers by limiting these benefits, ensuring that these high-income taxpayers pay at least a minimum amount of tax, the IRS said on its website.
The AMT exemption amount for tax year 2024 increased to $85,700 and starts to phase out at $609,350, up $4,400 and $31,200 compared to tax year 2023, respectively. The exemption amount for married couples filing jointly increased to $133,300 and begins to phase out at $1,218,700, up $6,800 and $62,400 compared to tax year 2023, the IRS said.
The tax year 2024 maximum Earned Income Tax Credit amount for taxpayers with three or more qualifying children is $7,830, an increase of $400 from tax year 2023.
A spokesperson from the IRS said that based on public statistics, out of 153.8 million tax returns, fewer than 180,000 taxpayers paid the alternative minimum tax in 2023. Numbers may be higher, though since the numbers were only crunched through November.
What about my health savings account contributions?
For tax year 2024, the limit for employee health savings account contributions is set to increase to $3,200, the IRS announced in November last year.
For tax year 2024, those with self-only coverage in a medical savings account have a maximum out-of-pocket expense amount of $5,550, up $250 from 2023.
Family coverage for tax year 2024 includes an out-of-pocket expense limit of $10,200 (an increase of $550 from tax year 2023).
Are tax brackets changing for tax year 2025?
In October, the IRS also released information on changes impacting taxpayers for tax year 2025, or when they file their taxes beginning in January 2026.
Changes taxpayers can be on the lookout for include another increase for single taxpayers and married individuals filing separately. The standard deduction will rise to $15,000, up $400 from this year, the IRS said.
For married couples filing jointly, the standard deduction will be $30,000, up $800, and for heads of households, the standard deduction will rise to $22,500, an increase of $600.
Brackets for singles and married couples filing jointly, according to the IRS, include:
- 37% − Single income over $626,350 and married couples filing jointly with income over $751,600
- 35% – Single income over $250,525 and married couples filing jointly with income over $501,050
- 32% – Single income over $197,300 and married couples filing jointly with income over $394,600
- 24% – Single income over $103,350 and married couples filing jointly with income over $206,700
- 22% – Single income over $48,475 and married couples filing jointly with income over $96,950
- 12% – Single income over $11,925 and married couples filing jointly with income over $23,850
- 10% – Single income of $11,925 or less and married couples filing jointly with income less than $23,850
According to the IRS, for qualifying taxpayers with three or more qualifying children, the new maximum Earned Income Tax Credit amount will be $8,046, up $216 from tax year 2024.
Saleen Martin is a reporter on USA TODAY’s NOW team. She is from Norfolk, Virginia – the 757. Follow her on Twitter at@SaleenMartin or email her atsdmartin@usatoday.com.
Source: Here’s what to know before filing
