New IRS Brackets Announced for 2025 – See All Official Changes Announced

For those whose mind is already in the new year, there are good news, the Internal Revenue Service (IRS) has already announced the tax adjustments for 2025, including new tax brackets, the Earned Income Tax Credit (EITC) amounts, and the new standard deductions, so getting up to speed in time should be easy.

The rules announced apply to the 2025 tax period and thus the results will be seen in the 2026 tax returns, the next tax season that will run from January 2025 to April 2025 applies to the 2024 tax period and those rules have already been in place for a year.

The most important change that is coming to the 2025 tax period is an adjustment to the tax brackets. These adjustments are made to counteract inflation and prevent taxpayers from paying more in taxes when their salaries keep up with inflation but receive no meaningful salary increase. As Bloomberg Tax explains, wider tax brackets and larger exemptions and credits typically mean a lower tax burden for most taxpayers.

New IRS Tax Brackets for 2025

The overall system will remain the same, with still seven tax brackets and the highest remaining at 37%. The rest of the tax brackets have been adjusted by 2.8% to offset inflation, benefiting some taxpayers by allowing a greater portion of their income to be taxed at lower rates. The new tax rates and ranges are as follows:

Tax Rate	Individual Income Range	Joint Filers Income Range
10%	Up to $11,925	Up to $23,850
12%	$11,926 – $48,475	$23,851 – $96,950
22%	$48,476 – $103,350	$96,951 – $206,700
24%	$103,351 – $197,300	$206,701 – $394,600
32%	$197,301 – $250,525	$394,601 – $501,050
35%	$250,526 – $626,350	$501,051 – $751,600
37%	Over $626,351	Over $751,601

As we have explained, the 37% tax rate is the only one that remains the same form 2024

Standard Deduction Increase for 2025

Another change that has been implemented is a standard deduction increase. Deductions reduce the amount of taxable income taxpayers need to pay, but they can be classified into two categories, itemized deduction and standard deductions.

The itemized deductions will not change as these are submitted individually and for a specific amount of money that changes from year to year, but since the standard deduction is meant to simplify filing it is the same for everyone and it needs to keep up with inflation. The new standard deductions will be:

• Individual filers: will see an increase of $400, reaching $15,000.
• Joint filers: will see an increase of $800, reaching $30,000.
• Heads of household: will see an increase of $600, reaching $22,500.

Changes to the Earned Income Tax Credit (EITC)

The EITC helps low- to moderate-income workers and families get a tax break. Although it is higher for families with children, you do not need to have offspring to qualify for it. The new amounts are:

• Eligible taxpayers with no children: maximum credit of $649.
• Eligible taxpayers with one child: maximum credit of $4,328.
• Eligible taxpayers with two children: maximum credit of $7,152.
• Eligible taxpayers with three or more children: maximum credit of $8,046

Why 2025 is a Pivotal Year and Potential 2026 Tax Increases

2025 is the year when certain temporary tax reforms expire, like the Tax Cuts and Jobs Act (TCJA), passed in 2017, which includes measures like reducing tax rates for corporations and individuals, increasing the standard deduction and family tax credits, eliminating personal exemptions and making it less beneficial to itemize deductions, limiting deductions for state and local income taxes and property taxes, limiting the mortgage interest deduction, reducing the alternative minimum tax for individuals and eliminating it for corporations, doubling the estate tax exemption, and reducing the penalty for violating the individual mandate of the Affordable Care Act.

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