The IRS has issued its annual statement of tax changes for 2025. Greetings from Gus Martinez, CPA and Tax Manager at Killingsworth Spencer CPAs. Below are the major tax inflation adjustments that affect most business owners and higher income taxpayers.
2025 Federal Income Tax Brackets
| Rate | For Single Filers | For Married Filing Joint | For Heads of Households |
| 10% | $0 to $11,925 | $0 to $23,850 | $0 to $17,000 |
| 12% | $11,925 to $48,475 | $23,850 to $96,950 | $17,000 to $64,850 |
| 22% | $48,475 to $103,350 | $96,950 to $206,700 | $64,850 to $103,350 |
| 24% | $103,350 to $197,300 | $206,700 to $394,600 | $103,350 to $197,300 |
| 32% | $197,300 to $250,525 | $394,600 to $501,050 | $197,300 to $250,500 |
| 35% | $250,525 to $626,350 | $501,050 to $751,600 | $250,500 to $626,350 |
| 37% | $626,350 or more | $751,600 or more | $626,350 or more |
Source: Internal Revenue Service, “Revenue Procedure 2024-40.”
2025 Standard Deduction
| Filing Status | Deduction Amount |
| Single | $15,000 |
| Married Filing Jointly | $30,000 |
| Head of Household | $22,500 |
Source: Internal Revenue Service, “Revenue Procedure 2024-40.”
2025 Qualified Business Income Deduction (Sec. 199A)
The Tax Cuts and Jobs Act of 2017 (TCJA) includes a 20 percent deduction for pass-through businesses. Limits on the deduction begin phasing in for taxpayers with income above $197,300 (or $394,600 for joint filers) in 2025.
| Filing Status | Threshold |
| Unmarried Individuals | $197,300 |
| Married Filing Jointly | $394,600 |
Source: Internal Revenue Service, “Revenue Procedure 2024-40.”
2025 Annual Exclusion for Gifts –
Increased from $18,000 to $19,000 per person
2025 Retirement Plan Changes – Highlights
IRA – The limit on annual contributions remains $7,000.
IRA Catch-up – The IRA catch‑up contribution limit for individuals aged 50 and older remains $1,000.
401 (k), 403 (b), 457 Plans, and the Federal Thrift Savings Plan – Contributions are increased to $23,500 from $23,000.
The catch-up contribution remains $7,500. Therefore, participants who are 50 and older generally can contribute up to $31,000 in 2025. For employees aged 60, 61, 62 & 63 the catch-up contribution limit is $11,250 instead of $7,500.
It will be important for our clients to budget their income and expenses for 2025 to determine what changes need to be made (if any) to withholding amounts and estimated payments. For more information or to schedule an appointment with one of our tax professionals, please call us at 770-552-8286.
Disclaimer: This post is for general information only and should not be taken as legal or financial advice