U.S. taxpayers are going to have a higher standard deduction for 2025.
The Internal Revenue Service announced increases in its annual inflation adjustments when it released its annual inflation adjustments Tuesday.
A $400 increase raises the deduction to $15,000 for single taxpayers and married individuals filing separate returns. For couples filing jointly, the standard deduction rises $800 to $30,000 for 2025. Taxpayers filing as head of household will see a standard deduction of $22,500, up by $600 from 2024.
Income thresholds for all seven federal tax bracket levels were also revised upward. The top tax rate, which remains 37%, will cover incomes greater than $626,350 for single taxpayers in tax year 2025, for example – compared to $609,350 in 2024, according to an Associated Press report.
The IRS makes such adjustments for each tax year to account for inflation, which has recently been on a downward trend. Last month, inflation in the U.S. dropped to its lowest point in more than three years, marking some encouraging economic news – but Americans are still feeling some key price pressures.
While taxpayers will again see higher standard deductions for 2025, the increases announced Tuesday are less than those seen in recent years. In tax adjustments announced last year, for example, the IRS raised single filers’ standard deduction by $750 between the 2023 and 2024 tax years – and by $1,500 and $1,100 for married couples and heads of households, respectively.
