Here are some key updates to the tax laws for 2025:
Standard Deductions: The standard deduction for single taxpayers and married individuals filing separately rises to $15,000, an increase of $400 from 2024. For married couples filing jointly, it increases to $30,000, up $800 from 2024. Heads of households will see their standard deduction rise to $22,500, an increase of $600.
Marginal Tax Rates: The top tax rate remains at 37% for individual single taxpayers with incomes over $626,350 ($751,600 for married couples filing jointly). Other rates include 35% for incomes over $250,525 ($501,050 for married couples filing jointly), 32% for incomes over $197,300 ($394,600 for married couples filing jointly), 24% for incomes over $103,350 ($206,700 for married couples filing jointly), 22% for incomes over $48,475 ($96,950 for married couples filing jointly), 12% for incomes over $11,925 ($23,850 for married couples filing jointly), and 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
Alternative Minimum Tax (AMT): The exemption amount for unmarried individuals increases to $88,100 ($68,650 for married individuals filing separately) and begins to phase out at $626,350. For married couples filing jointly, the exemption amount increases to $137,000 and begins to phase out at $1,252,700.
Earned Income Tax Credit (EITC): For qualifying taxpayers with three or more qualifying children, the maximum EITC amount is $8,046, an increase from $7,830 for tax year 2024.
Qualified Transportation Fringe Benefit: The monthly limitation for the qualified transportation fringe benefit and qualified parking rises to $325, increasing from $315 in tax year 2024.
Health Flexible Spending Cafeteria Plans: The dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,300, increasing from $3,200 in tax year 2024.
These updates are designed to help taxpayers navigate the changing tax landscape and optimize their financial situations. If you have any specific questions or need further assistance, feel free to ask!
