The Internal Revenue Service (IRS) adjusts its tax brackets each year to account for inflation, and these limits will be raised by 2.7% in 2025, the agency announced at the start of the year.
This means that if you earn the same as before, you may fall into a lower bracket, which is fantastic for your wallet. And, yes, this applies to when you declare in 2026, but it is preferable to prepare properly.
Changes made by the IRS for upcoming tax returns
The standard deduction has also been increased: $15,000 for single or married individuals filing separately, $30,000 for married couples filing jointly, and $22,500 for head of household.
Essentially, the IRS wants you to deduct more money before determining how much you owe. Less complications mean more savings. That’s how nice it is.
There are seven income tax brackets, which range from 10% to 37%. These brackets are based on your income and marital status. Here are some examples:
- 10%: Applies to singles with income less than $11,925 or couples with income less than $23,850. This section is ideal if you are starting your working life or if your income is low.
- 12%: Applies if you exceed the income of the previous bracket, but do not exceed $48,475 (singles) or $96,950 (couples). Many middle class people fall into this range.
- 22%: Applies to singles with income over $48,000 or couples with income over $96,000. This is a middle ground where the IRS (Internal Revenue Service) requires a greater contribution.
For those with higher incomes
- 24%: Applies to singles with income over $103,000 or couples with income over $206,000.
- 32%: Applies if you exceed $197,000 (single) or $394,000 (couple). This is where the impact of taxes is really felt.
- 35% and 37%: Applies to gross income greater than $250,000 (singles) or $501,000 (couples). These are the highest brackets, where the IRS makes sure that people with higher incomes contribute more.
Keep in mind that these are federal numbers, but some states add their own taxes, so check where you live and how these numbers apply to you.
The tax season dates you must have in mind
The IRS is ready to go: tax season officially began on Monday, January 27, 2025. This is when they began accepting and processing your returns. You have until Tuesday, April 15, 2025, to file your taxes and pay anything owed. Circle the date, set a reminder, and do whatever it takes to avoid any fines or penalties.
Need more time? Request an extension, and you will have until Wednesday, October 15, 2025 to file. However, if you owe money, you must pay it by April 15 to avoid penalties. The extension buys you time to file, not to put off paying.
