What’s New in the IRS 2025 Tax Adjustments?

Dust off those spreadsheets—2025 is bringing new numbers to crunch! The IRS has just announced updates that will affect the way you file your returns in 2026, and it's all about adjusting for inflation. From standard deductions to tax credits, here’s what’s changing and how it might affect you.  

What’s New in Tax Year 2025?

Bigger Standard Deductions starting in 2025, you can expect a little extra in your pocket, thanks to increased standard deductions. Here's a quick rundown: 

• Single taxpayers and married individuals filing separately will see a bump from $14,600 in 2024 to $15,000 in 2025. 
• Married couplesfiling jointly can claim a deduction of $30,000, up from $29,200. 
• Heads of households also get a boost, with the deduction rising from $21,900 to $22,500.

Not exactly the windfall that’ll buy a Tesla, but every little bit counts when tax season rolls around. 

Marginal Tax Rates—What’s the Damage? For 2025, the marginal tax rates stay the same, but the income brackets are shifting to account for inflation: 

• 37% for incomes above $626,350 for single filers and $751,600 for married couples filing jointly. 
• 35% for incomes over $250,525 (single) or $501,050 (joint). 
• Other brackets include 32%, 24%, 22%, 12%, and 10%, adjusted accordingly. So, if you’re on the borderline, you might just drop down a notch!

Notable Adjustments for Tax Professionals

Alternative Minimum Tax (AMT) Exemptions Are on the Rise. The AMT thresholds have nudged up: 

• Unmarried individuals get a new exemption of $88,100 (previously $86,400). 
• Married couples filing jointly see an exemption increase to $137,000.

Watch out if you’re on the high-income side—these changes could shift your AMT liability. 

Earned Income Tax Credit (EITC) gets a Boost. For those eligible for the EITC, the maximum credit for families with three or more children jumps to $8,046, up from $7,830. This adjustment could mean a little more breathing room for those who qualify. 

What About Deductions and Credits? 

Medical Savings Accounts (MSAs) and Health Plans see small adjustments. Got a Medical Savings Account? Here’s the summary: 

• For self-only coverage, the annual deductible starts at $2,850, capping at $4,300. 
• The maximum out-of-pocket expense for self-only rises to $5,700.
• For family coverage, deductibles range from $5,700 to $8,550, with out-of-pocket expenses capped at $10,500. 

Not earth-shattering changes, but enough to warrant a second glance during your planning sessions. 

Foreign Earned Income exclusion gets a bump. For those working abroad, the foreign earned income exclusion increases to $130,000, up from $126,500. A slight uptick, but every bit helps when navigating foreign tax obligations. 

Estate and Gift Tax Adjustments. Thinking of estate planning or gifting? The exclusion for estates climbs to $13,990,000, and the annual exclusion for gifts goes up to $19,000. 

What’s Staying the Same?

Don't get too excited—some things are still set in stone. Personal exemptions remain at zero, thanks to the 2017 Tax Cuts and Jobs Act, and itemized deductions are still unlimited, as they have been since 2018. The Lifetime Learning Credit thresholds are also unchanged. 

What Does This Mean for Tax Professionals?

Let’s face it: Tax changes can feel as dry as a bowl of bran flakes. But these updates offer real opportunities for strategic planning. For those advising clients, it's a chance to revisit deductions, credits, and estate planning strategies to make sure they're optimized for the new thresholds. Whether you’re crunching numbers for yourself or guiding others, the inflation adjustments could help keep tax liabilities in check. 

'There’s no art to tax, just arithmetic,' and the annual inflation adjustments are a firm reminder of that reality. 

With these changes on the horizon, it's essential to stay ahead of the game—especially if Congress doesn’t act to extend the lower tax rates that expire after 2025. The potential reversion to 2017 levels looms large, so keep your eyes peeled for updates that might reshape tax strategies even further. 

Tax pros, you know the drill. The devil is in the details, and the IRS just handed you 20+ pages of fine print to digest before 2026 rolls around. If you thought this year’s tax season was a challenge, buckle up—2025 is gearing up to be just as engaging. 

Now, take a deep breath, grab your favorite calculator, and dive into the numbers. You’ve got this!