2025 Tax Rates & Inflation Adjustments

The cost of living adjustments and tax changes for 2025 were released by the IRS in Revenue Procedure 2024-40 (PDF) and Notice 2024-80 (PDF).

In 2025, the income tax brackets will experience a 2.8% adjustment, representing the most modest increase since 2021. Summarized below are the adjustments we feel will be of most interest to our readers. You can also download our two-page tax reference guide (PDF) for a more comprehensive overview and reminder of other limits which may impact you but have not changed. The figures reflected in this article are as of the October 22, 2024, and November 1, 2024, release dates. To the extent any additional changes are introduced, we will update this article and the reference dates so you can be sure you have the most current information.

Highlights of Adjustments for 2025

¹ A married filer who is blind or over age 65 can claim an additional $1,600. Two married filers who are both over age 65 or blind can claim $3,200, up $100 from 2024.
² Single or head-of-household filers who are blind or over age 65 can claim an additional $2,000 standard deduction, up $50 from 2024.

Contribution limits for Traditional IRAs, Roth IRAs, and IRA and Elective Deferral Plan catch-up contributions are all indexed to inflation. However, the IRA contribution and catch-up contribution limits remain unchanged for 2025. There was no change to the Elective Deferral catch-up contribution limits for individuals over age 50. However, starting in 2025, there will be new catch-up contribution limits into elective deferral plans for individuals age 60–63.

For 2025, adjustments were also made to the elective deferral contribution limits and the AGI Phase-Outs for Roth contributions and deductible IRA contributions. The updated limits and Phase-Outs are below.

¹ Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
² Catch-up contributions are available for anyone over age 50
³ Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans

There are many other cost-of-living adjustments for 2025 which may impact you. Review Revenue Procedure 2024-40 (PDF) and Notice 2024-80 (PDF) and consult your CPA to see if there are others you need to be aware of for your specific situation.

This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.