2025 vs. 2024 Tax Brackets: What’s Changing?
The IRS has announced updated tax brackets for 2025, and the adjustments could save taxpayers thousands. The key difference? Income thresholds for each bracket rose by approximately 3% from 2024 due to inflation.
Example (Single Filers):
2024 22% Bracket: Up to $192,000
2025 22% Bracket: Up to $197,000
A single filer earning $197,000 in 2025 would pay $500 less in taxes than in 2024 on income between $192,000–$197,000 (saving 10% in marginal taxes). These increases apply to all brackets, meaning most taxpayers will keep more of their income taxed at lower rates.
How Tax Brackets Work (No, You Won’t Lose 37% of Your Salary!)
The U.S. tax system is progressive, meaning different portions of your income are taxed at different rates.
Example: A Single Filer Earning $100,000 in 2025
First $12,360: Taxed at 10% ($1,236)
Next $37,080 ($12,361 - $49,440): Taxed at 12% ($4,450)
Next $50,560 ($49,441 - $100,000): Taxed at 22% ($11,123)
Total Tax: $16,809 (not $22,000 as a flat 22% might suggest).
Biggest Tax Jumps to Watch
12% → 22%: Occurs at $49,440 (single) / $98,880 (married)
24% → 32%: Occurs at $197,000 (single) / $395,000 (married)
Why It Matters
Crossing into a higher bracket only affects the income above that threshold. A $10,000 raise from $195,000 to $205,000 (single) means about $800 more in taxes on the portion above $197,000.
2025 Standard Deduction Boost
Single Filers: $15,000 (up from $14,600)
Married Filers: $30,000 (up from $29,200)
Impact
A married couple in the 24% bracket saves $192 extra compared to 2024. For most taxpayers, itemizing deductions (e.g., mortgage interest, charity) becomes harder unless expenses exceed these new thresholds.
Capital Gains Changes for 2025
Long-term capital gains (assets held >1 year) now have higher income limits for lower tax rates:
Example
A married couple earning $97,000 with a $3,000 stock gain pays $0 in taxes in 2025 compared to $450 in 2024 under the previous limits.
Tax Planning Tips for 2025
Defer Income: If nearing a bracket threshold, delay bonuses or sales to 2026.
Harvest Gains: Sell assets in low-income years to qualify for 0% rates.
Maximize Deductions: Contribute more to HSAs/401(k)s—limits are rising (exact numbers pending IRS confirmation).
High Earners Alert
The 32%+ brackets start at $197,000 (single) and $395,000 (married). Consider tax-deferred accounts or charitable giving to stay below these cliffs.
Need Help?
Tax strategy starts now! I’ve helped clients save thousands by navigating these brackets. Visit Digital Tax Express Individual Solutions to book a consultation.
