IRS 2024 and 2025 Tax Bracket Changes: What Taxpayers Must Know

As January draws nearer, the IRS updates tax years 2024 and 2025 in key areas to cushion the effects of inflation on US households. These include: increases in standard deductions, income thresholds for the tax bracket as well as adjustments to tax credits.

Tax Year 2024: Notable Highlights:

1. Standard Deduction Increases:

• Single taxpayers and married people filing separately: $14,600 (up by $750 compared to 2023)
• Married couples filing jointly: $29,200 (up $1,500)
• Head of Household: $21,900 (up $1,100)

2. 2024 Tax Brackets:

• 37%- single earns above $609,350 or married twice above $731,200
• 35%- single earns above $243,725 or married twice above $487,450
• 32%- single earns above $191,950 or married twice above $383,900
• 24% – Single income above $100,525; married couples over $201,050
• 22%- Single $47,150; married $94,300
• 12%- Single $11,600; Married $23,200
• 10%- Single income of $11,600 or less; married couples under $23,200

3. Alternative Minimum Tax (AMT):

• Single exemption: $85,700 (phases out at $609,350)
• Married couple exemption: $133,300 (phases out at $1,218,700)

4. Earned Income Tax Credit (EITC):

In 2024, for taxpayers with three or more qualifying children, this amount increases to 7,830 dollars from the 2023 value of dollars 400.

5. Health Savings Account (HSA) contributions:

• Individual limit: $3,200
• Family out-of-pocket limit: $10,200

What Will Change for Tax Year 2025?

As part of the 2025 tax year changes (to be filed in 2026), deductions, as well as income thresholds, will increase further:

1. Standard Deduction:
   • Single Filers and Married Individuals Filing Separately: $15,000 (up by $400)
   • Married Couples Filing Jointly: $30,000 (up by $800)
   • Head of Household: $22,500 (up by $600)
2. Income Tax Brackets for 2025:
   • 37% – For singles, income having a taxable amount exceeding $626,350; for married couples, $751,600.
   • 35% – For singles, income having a taxable amount exceeding $250,525; for married couples, $501,050.
   • 32% – For singles above an income of $197,300; for married couples, $394,600.
   • 24% – For single individuals, the amount of income is above $103,350; for married couples is above $206,700.
   • 22% – For single income above $48,475; for married couple income above $96,950.
   • 12% – For single income above $11,925; for married couple income above $23,850.
   • 10%- For self-taxes, those whose income is below $11,925 are married couples with incomes below $23,850.
3. Earned Income Tax Credit:
   • Maximum credit from this point for taxpayers with three or more qualifying children will be $8,046-an increase of $216 from 2024.

The alterations have significance because for people they prove better:

Annual changes by the IRS assist taxpayers in being better adjusted with inflation. This is so that they cannot say their buying power was dented.

Knowing about such modification:

• Maximizing deductions and credits for taxpayers.
• Improved family planning for contributions to health savings accounts and other tax-advantaged tools.
• Individuals and couples could strategize their tax filings to avoid AMT impacts.

As the filing season of 2025 approaches, one is expected to be educated about these IRS changes as a preparation for easy and smooth facilitation of tax experience by taxpayers.