.png)
The Internal Revenue Service (IRS) has recently released its annual inflation adjustments for more than 60 tax provisions for the tax year 2025. These adjustments are crucial for taxpayers as they help maintain purchasing power in the face of rising costs.
Key Highlights:
Standard Deduction Increase:
For married couples filing jointly: Rises to $29,200, up $950 from 2024
For single taxpayers and married individuals filing separately: Increases to $14,600, a $475 increase
Tax Bracket Thresholds: All tax bracket thresholds will increase, potentially lowering tax burdens for some taxpayers.
Alternative Minimum Tax (AMT) Exemption:
For married couples filing jointly: Rises to $133,300
For single filers: Increases to $85,700
Earned Income Tax Credit (EITC): The maximum credit for qualifying taxpayers with three or more children will be $7,830.
Foreign Earned Income Exclusion: Will increase to $126,500.
These adjustments are designed to prevent "bracket creep," where inflation pushes taxpayers into higher tax brackets without a real increase in income.
It's important to note that these adjustments will affect tax returns filed in 2026 for the 2025 tax year. Taxpayers should consider these changes when planning their finances and tax strategies for the coming years.
Comments