IRS Announces New 2025 Inflation Adjustments

The IRS released its annual inflation adjustments for the 2025 tax year, increasing thresholds and deduction limits across the board.

The standard deduction rises to $15,000 for single filers and $30,000 for married couples filing jointly.

Income tax brackets have been widened slightly to prevent bracket creep.

Additionally, contribution limits for Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and retirement plans have been raised.

The foreign earned income exclusion increases to $125,000, and the estate tax exemption hits $13.9 million.

These adjustments reflect the current inflationary environment and aim to shield taxpayers from increased liability due to cost-of-living changes.

Tax experts recommend reviewing withholdings and estimated payments accordingly.

The IRS emphasized that these changes are automatic and require no action from most taxpayers.

Financial advisors and software providers have begun updating their tools to account for the new figures.