With every new year there comes change, and taxes are no exception to this. This is why the Internal Revenue Service (IRS) has published the changes to its tax year 2025 already, to give taxpayers time to adapt and inform themselves about them and be more comfortable in the new year. Many aspects will remain the same, some will have slight modifications and others will be completely overhauled, but the most important changes are those that will directly impact the average taxpayer.

The changes are not meant to be arbitrary or bothersome, they are meant to stay in line with the changing economic times and ease taxpayer’s burdens.

Standard Deductions and Marginal Tax Rates

In 2025, standard deductions are seeing some increases:

• Single filers and those married but filing separately get a $400 increase, setting the deduction at $15,000.
• Married couples filing jointly will see an $800 jump, making theirs $30,000.
• Heads of households are also getting a raise, with a $600 increase bringing their deduction to $22,500.

One thing that is not changing in the new year is the top marginal tax rate, which will remain at 37% for singles with incomes over $626,350, and for married couples filing jointly with incomes over $751,600. What will change are the thresholds for the other tax brackets:

• 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
• 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
• 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
• 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
• 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
• 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

Adjustments in Tax Credits and Benefits

These are especially important when it comes to filing tax returns, some of the alternative minimum tax exemption amounts have been adjusted.

• The exemption for unmarried individuals has been increased to $88,100 and will begin to phase out at $626,350.
• Married couples filing jointly will see their exemption rise to $137,000, with phase-out starting at $1,252,700.

Another change will be reflected in the Earned Income Tax Credit (EITC), especially relevant for taxpayers with three or more qualifying children since it will increase to a maximum of $8,046.

The qualified transportation fringe benefit will also see a change, its monthly limitation will rise to $325, and health flexible spending arrangements, will have their employee contribution limits climbing to $3,300.

Other IRS Notable Adjustments

Medical savings account participants will see new deductible ranges: $2,850 to $4,300 for individual plans and $5,700 to $8,550 for family coverage. Meanwhile, the foreign earned income exclusion will rise to $130,000, up from $126,500 in 2024.

Estate and gift tax exclusions are increasing, too, the basic exclusion for estates jumps to $13,990,000, and the annual gift exclusion goes up to $19,000. For adoption credits, there’s good news as well: the maximum credit for adopting a child with special needs is set to reach $17,280.

Renewal of Preparer Tax Identification Numbers (PTINs)

In addition to the tax adjustments, the IRS started processing renewals for preparer tax identification numbers (PTINs) for the 810,000 tax return preparers that need to do so. The renewal fee of $19.75 has not change and the process can be done online for convenience.

It is important to renew the PTIN on time to avoid penalties, as well as continue to educate themselves through continuing courses provided by the IRS (their Annual Filing Season Program is available). This program is meant to improve the accuracy and integrity of federal tax returns, helping both the taxpayers and tax professionals with tax filings.

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