Key takeaways
Some of 2025’s tax changes are known, such as changes to tax brackets and the standard deduction. Others remain to be seen, because the Tax Cuts and Jobs Act is set to expire at the end of 2025.
Updates include adjustments to retirement plan contribution limits, the annual gift tax exclusion limit and lifetime estate tax exemption amount.
As there may be further changes throughout the year, consider consulting with a tax professional to make sure your financial plan is optimized for a healthy financial future.
2025 is likely to be a dynamic year for tax planning, with both known and unknown changes ahead.
The “known” changes are somewhat routine. Each year, the IRS makes inflation-related adjustments to more than 60 tax provisions to keep income tax brackets, deductions and other inputs in line with changes occurring related to the cost of living. On average, adjustments for the tax year 2025 (filing returns in 2026) will increase by about 2.8%.
The “unknown” changes are where things could get interesting. Several provisions put in place as part of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. Current rules set to expire include:
The new administration in Washington, D.C. will likely present legislation that would impact the outcome of the TCJA sunset and other tax policies. These changes could affect your tax planning strategies during the coming year and therefore bear careful watching. For now, here are details of key existing changes for 2025 as outlined by the IRS.
The seven federal tax rates remain the same for 2025: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The qualifying income for each 2025 tax bracket moves slightly higher compared to 2024.
A key income threshold to watch for high-income filers is $197,300 for single filers and $394,600 for married couples filing jointly. Those are the respective thresholds for moving up from the 24% tax rate bracket to the higher 32% rate bracket. The top marginal income rate of 37% will apply to single filers with taxable income of $626,350 and, for married couples filing jointly, taxable income above $751,600.
Tax rate
Single Filers
Married filing Joint Return
Head of Household
10%
$0 to $11,925
$0 to $23,850
$0 to $17,000
12%
$11,925 to $48,475
$23,850 to $96,950
$17,00 to $64,850
22%
$48,475 to $103,350
$96,950 to $206,700
$64,850 to $103,350
24%
$103,350 to $197,300
$206,700 to $394,600
$103,350 to $197,300
32%
$197,300 to $250,525
$394,600 to $501,050
$197,300 to $250,500
35%
$250,525 to $626,350
$501,050 to $751,600
$250,500 to $626,350
37%
$626,350 or more
$751,600 or more
$626,350 or more
Source: Internal Revenue Service.
The standard deduction represents the amount of income you can exclude from taxes before the above tax rates begin to apply.
The 2025 standard deduction increases by $400 for single filers and by $800 for joint filers. People over age 65 or the blind may claim an additional standard deduction of $2,000 for single filers and $1,600 for joint filers. In addition, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,350 or the sum of $450 and the individual’s earned income.
Filing Status
Deduction Amount
Single
Married Filing Jointly
Head of Household
Long-term capital gains face different brackets and rates than ordinary income, and those brackets also adjusted slightly higher for 2025.
It is possible for people with lower income to pay no long-term capital gains tax when selling appreciated assets that they have held for more than a year (long-term capital gain). For example, the 0% long-term capital gains tax applies to married couples filing a joint return with incomes of $96,700 or below.
Applicable long-term capital gains tax rate
Single filers with taxable income over
Married Couples filing Joint returns, taxable income over
Heads of Households, taxable income over
0%
15%
20%
The alternative minimum tax (AMT) was created in 1969 to close tax loopholes for those in higher tax brackets. The TCJA significantly narrowed the scope of the alternative minimum tax in a few ways, including introducing higher AMT exemptions and higher income levels for exemption phaseout.
Adjustments to those provisions for 2025 include:
The maximum child tax credit is $2,000 per qualifying child and is not adjusted for inflation. The refundable portion of the 2025 child tax credit is adjusted for inflation and will remain at $1,700.
The 2025 gift tax exclusion allows the first $19,000 of monetary gifts to any person to be excluded from tax, an increase from $18,000 in 2024. The exclusion increased to $190,000 for gifts to spouses who are not citizens of the United States.
In addition, the lifetime exclusion amount on estates of decedents who die during 2025 increased to $13.99 million per individual, up from $13.6 million in 2024.
Certain items that were indexed for inflation in the past are currently not adjusted.
Among those tax issues that remain unchanged:
To preserve and transfer significant wealth, it’s important to consider current tax laws and related sunset provisions and plan accordingly. Given the potential changes ahead, it’s essential to review how tax bracket adjustments and other changes affect your tax planning strategies.
Learn how we can help you design a plan to grow and protect your wealth.
The TCJA is set to sunset at the end of 2025, and if Congress fails to act, tax provisions will revert to what they used to be. Here’s how to prepare.
Proactive tax planning throughout the year may help you reduce your tax liabilities and minimize tax time surprises.
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