IRS Announces 2025 Inflation Adjustments: What Changes for Your Tax Bracket and Deductions

Adam Tahir
Apr 10
2 min read

The Internal Revenue Service (IRS) has released its annual inflation adjustments for tax year 2025, impacting key tax provisions such as standard deductions, income tax brackets, and various credits and thresholds.

These changes are designed to account for the rising cost of living and help prevent "bracket creep," where inflation pushes taxpayers into higher tax brackets even if their purchasing power hasn’t changed. For individuals, business owners, and tax professionals, understanding these adjustments is crucial for planning the upcoming tax year.

Here’s what you need to know.

New 2025 Standard Deduction Amounts

For tax year 2025 (filed in 2026), the standard deduction increases as follows:

Single filers: $15,000 (up from $13,850 in 2024)
Married filing jointly: $30,000 (up from $27,700 in 2024)
Heads of household: $22,000 (up from $20,800 in 2024)

These increases could reduce taxable income for millions of Americans and simplify return preparation for those who don’t itemize deductions.

Updated 2025 Income Tax Brackets

The marginal tax rates remain the same, but the income thresholds have been adjusted for inflation:

Tax Rate	Single Filers	Married Filing Jointly
10%	$0 – $11,750	$0 – $23,500
12%	$11,751 – $47,100	$23,501 – $94,200
22%	$47,101 – $100,725	$94,201 – $201,450
24%	$100,726 – $191,250	$201,451 – $382,500
32%	$191,251 – $382,500	$382,501 – $693,750
35%	$382,501 – $626,350	$693,751 – $751,600
37%	Over $626,350	Over $751,600

These changes may lower your effective tax rate or prevent a higher rate from applying to your income due to inflation-driven wage growth.

Key Additional Inflation Adjustments for 2025

Earned Income Tax Credit (EITC): The maximum credit increases to $7,590 for taxpayers with three or more qualifying children.
Alternative Minimum Tax (AMT) exemption amounts also increase to $88,300 for individuals and $126,500 for married couples filing jointly.
Flexible Spending Account (FSA) contribution limits and Health Savings Account (HSA) thresholds will also rise, though those specific figures are usually announced separately.

What This Means for You or Your Business

These adjustments could impact how you:

Estimate quarterly taxes
Plan year-end deductions and deferrals
Structure salaries, bonuses, or draws
Optimize contributions to tax-advantaged accounts

Whether you're a small business owner or an employee, knowing these numbers now allows for proactive 2025 tax planning.

How Bizora Helps You Plan Proactively

At Bizora, we work with businesses and CPAs to stay ahead of federal tax changes. From estimating taxes to implementing tax-saving strategies based on income thresholds and deductions, our tools and advisory support simplify compliance and planning.

Prepare Now for a Smoother 2025 Filing Season

Inflation adjustments may seem minor, but they can affect your tax outcome significantly. Review your income projections, deductions, and withholdings now to take full advantage of these updates.

Visit bizora.ai for expert insights, tax planning tools, and compliance support tailored for growing businesses.