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INTEL · December 02, 2024
Annual Tax Changes: Your 2025 Reference Guide
Nerre Shuriah
JD, LLM, CM&AA, CBEC® | Senior Director of Wealth Planning
First Citizens Wealth INTEL: Insights and News—Taxation, Election & Legislation
Each month, we'll cover time-sensitive updates on tax, election and legislation developments that could affect you.
To counteract the impact inflation may have on taxpayers, the IRS recently made its annual adjustments to 2025 tax provisions. The yearly changes are an ongoing effort to prevent inflation from inequitably moving taxpayers into higher tax brackets.
More than 60 changes were made this year, including standard deductions, marginal rates and alternative minimum tax exemptions. Here's a summary of the significant adjustments for the 2025 tax year for returns filed in 2026.
Who is impacted
Taxpayers filing a return in 2026 for the 2025 tax year will need to adhere to these IRS adjustments. To provide a sense of the scale of the changes, 2024 tax year figures are included in the tables below for most of the categories.
Standard deductions
2025 Deductions |
2024 Deductions |
|
|---|---|---|
Individual |
$15,000 |
$14,600 |
Married filing separately |
$15,000 |
$14,600 |
Married filing jointly |
$30,000 |
$29,200 |
Head of household |
$22,500 |
$21,900 |
Marginal tax rates
2025 Rates |
Individual income |
Married filing jointly income |
|---|---|---|
10% |
$11,925 or less |
$23,850 or less |
12% |
Over $11,925 |
Over $23,850 |
22% |
Over $48,475 |
Over $96,950 |
24% |
Over $103,350 |
Over $206,700 |
32% |
Over $197,300 |
Over $394,600 |
35% |
Over $250,525 |
Over $501,050 |
37% |
Over $626,350 |
Over $751,600 |
Alternative minimum tax exemptions
2025 Exemption Amounts |
|
|---|---|
Individual |
$88,100—begins to phase out at $626,350 |
Married filing separately |
$68,650—begins to phase out at $626,350 |
Married filing jointly |
$137,000—begins to phase out at $1,252,700 |
Earned income tax credits
2025 Credits |
2024 Credits |
|
|---|---|---|
Qualifying taxpayers with three or more qualifying children |
$8,046 |
$7,830 |
Additional stipulations apply. Explore the October 2025 IRS news release for additional details.
Adoption credits
2025 Credits |
2024 Credits |
|
|---|---|---|
Adoption of a child with special needs |
Up to $17,280 |
Up to $16,810 |
Additional stipulations apply. Explore the October 2025 IRS news release for additional details.
Health flexible spending plans
2025 Limitations |
2024 Limitations |
|
|---|---|---|
Contributions to employee health flexible spending plans |
$3,300 |
$3,200 |
Medical savings accounts
2025 Amount |
2024 Amount |
|
|---|---|---|
Deductible—individual coverage |
Between $2,850 and $4,300 |
Between $2,800 and $4,150 |
Maximum out-of-pocket expense—individual |
$5,700 |
$5,550 |
Deductible—family |
Between $5,700 and $8,550 |
Between $5,550 and $8,350 |
Maximum out-of-pocket expense—family |
$10,500 |
$10,200 |
Other exclusions
2025 Exclusion |
2024 Exclusion |
|
|---|---|---|
Foreign earned income |
$130,000 |
$126,500 |
Estate tax |
$13,990,000 |
$13,610,000 |
Annual exclusion for gifts |
$19,000 |
$18,000 |
What action is required—and when
The IRS adjustments go into effect for the 2025 tax year, so tax returns filed in 2026 will be required to comply with the changes. To understand how the changes will impact your tax strategies for the coming year and allow ample time to adjust, we recommend speaking with your financial team before tax season.
Who you should talk to now
Given the number of tax adjustments taking place and the range of categories they affect, reviewing the October 2025 IRS news release is a prudent next step. For more detailed information regarding the latest IRS tax changes and their potential impact on your 2025 financial plan, contact a First Citizens wealth consultant today.
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Nerre Shuriah
JD, LLM, CM&AA, CBEC® | Senior Director of Wealth Planning
