IRS Tax Bracket Changes for 2025: What to Expect
Federal income tax brackets are expected to rise in 2025 but at a lower rate than in recent years. According to CBS News, citing an analysis by Bloomberg Tax, tax brackets will likely increase by 2.8% for the 2025 tax year. This is the smallest inflation adjustment in at least three years, following a 5.4% increase in 2024 and a 7.1% increase in 2023.
For example, under the 2025 brackets, a single filer could earn up to $11,925 before being taxed at the 10% rate, compared to $11,600 in 2024. Additionally, someone in the 24% tax bracket would see their maximum earnings before moving to a higher bracket increase from $191,950 to $197,300.
The individual tax rates will remain the same at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These brackets are adjusted yearly based on the Consumer Price Index (CPI), which accounts for inflation and changes in the cost of goods and services. This annual adjustment helps prevent "bracket creep," where inflation pushes taxpayers into higher tax brackets or reduces the value of credits, deductions, and exemptions without an actual increase in real income.
The new tax brackets will take effect in 2025, with taxes due in 2026.
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