The IRS announced its new inflation-adjusted tax brackets for 2025 on Tuesday, with annual income thresholds increasing by about 2.8% from 2024 – the smallest jump in several years.
Each fall, the IRS announces inflation-adjusted changes to tax brackets and dozens of other provisions for the following tax year. Because inflation has soared during the pandemic, bracket adjustments have been larger in recent years. reaching 7% in 2023 And 5.4% in the current year.
The idea is to protect taxpayers from bracket creep – when workers are pushed into higher tax brackets due to the impact of cost-of-living adjustments intended to offset inflation – without changing their living standards.
But now that US inflation has cooled lowest level in three yearsthe annual adjustments from the IRS have also become smaller.
For example, the new 10% tax bracket threshold for married couples filing jointly will rise to $23,850 in 2025, an increase of 2.8% from the 2024 threshold of $23,200.
The standard deduction in 2025 will rise to $30,000 for married couples filing jointly, an increase of about 2.7% from the current tax year’s $29,200.
—This is a breaking story and will be updated.
