Many tax, expensing, and penalty figures are adjusted annually for cost-of-living increases. These adjustments reflect the average chained Consumer Price Index (CPI) for all-urban customers (C-CPI-U) for the 12-month period ending the previous August 31.
The August 2024 CPI summary has been released by the U.S. Bureau of Labor Statistics. Using the chained CPI for August 2024 (and the preceding 11 months), Thomson Reuters Checkpoint has calculated the 2024 indexed amounts for nearly 250 figures.
Below are some highlights for 2025.
Tax rate schedules. The tax rate schedules for 2025 will be as follows.
For married individuals filing joint returns and surviving spouses:
If taxable income is not over $23,850; the tax is 10% of taxable income
If taxable income is over $23,850 but not over $96,950; the tax is $2,385.00 plus 12% of the amount over $23,850
If taxable income is over $96,950 but not over $206,700; the tax is $11,157.00 plus 22% of the amount over $96,950
If taxable income is over $206,700 but not over $394,600; the tax is $35,302.00 plus 24% of the amount over $206,700
If taxable income is over $394,600 but not over $501,050; the tax is $80,398.00 plus 32% of the amount over $394,600
If taxable income is over $501,050 but not over $751,600; the tax is $114,462.00 plus 35% of the amount over $501,050
If taxable income is over $751,600; the tax is $202,154.50 plus 37% of the amount over $751,600
For single individuals (other than heads of households and surviving spouses):
If taxable income is not over $11,925; the tax is 10% of taxable income
If taxable income is over $11,925 but not over $48,475; the tax is $1,192.50 plus 12% of the amount over $11,925
If taxable income is over $48,475 but not over $103,350; the tax is $5,578.50 plus 22% of the amount over $48,475
If taxable income is over $103,350 but not over $197,300; the tax is $17,651.00 plus 24% of the amount over $103,350
If taxable income is over $197,300 but not over $250,525; the tax is $40,199.00 plus 32% of the amount over $197,300
If taxable income is over $250,525 but not over $626,350; the tax is $57,231.00 plus 35% of the amount over $250,525
If taxable income is over $626,350; the tax is $188,769.75 plus 37% of the amount over $626,350
For heads of household:
If taxable income is not over $17,000: the tax is 10% of taxable income
If taxable income is over $17,000 but not over $64,850; the tax is $1,700.00 plus 12% of the excess over $17,000
If taxable income is over $64,850 but not over $103,350; the tax is $7,442.00 22% of the excess over $64,850
If taxable income is over $103,350 but not over $197,300; the tax is $15,912.00 plus 24% of the excess over $103,350
If taxable income is over $197,300 but not over $250,500; the tax is $38,460.00 plus 32% of the excess over $197,300
If taxable income is over $250,500 but not over $626,350; the tax is $55,484.00 plus 35% of the excess over $250,500
If taxable income is over $626,350; the tax is $187,031.50 plus 37% of the excess over $626,350
For marrieds filing separate returns:
If taxable income is not over $11,925; the tax is 10% of taxable income
If taxable income is over $11,925 but not over $48,475 the tax is $1,192.50 plus 12% of the excess over $11,925
If taxable income is over $48,475 but not over $103,350; the tax is $5,578.50 plus 22% of the excess over $48,475
If taxable income is over $103,350 but not over $197,300; the tax is $17,651.00 plus 24% of the excess over $103,350
If taxable income is over $197,300 but not over $250,525; the tax is $40,199.00 plus 32% of the excess over $197,300
If taxable income is over $250,525 but not over $375,800; the tax is $57,231.00 plus 35% of the excess over $250,525
If taxable income is over $375,800; the tax is $101,077.25 plus 37% of the excess over $375,800
For estates and trusts:
If taxable income is less than $3,150; the tax is 10% of taxable income
If taxable income is over $3,150 but not over $11,450; the tax is $315.00 plus 24% of the excess over $3,150
If taxable income is over $11,450 but not over $15,650; the tax is $2,307.00 plus 35% of the excess over $11,450
If taxable income is over $15,650; the tax is $3,777.00, plus 37% of the excess over $15,650
Standard deductions. The basic standard deduction for 2025 will be:
Joint return or surviving spouse: $30,000 ($29,200 for 2024)
Single (not head of household or surviving spouse): $15,000 ($14,600 for 2024)
Head of household $22,500: ($21,900 for 2024)
Married filing separate returns: $15,000 ($14,600 for 2024)
Earned income tax credit. For 2025, the maximum amount of earned income on which the earned income tax credit will be computed is $8,490 for taxpayers with no qualifying children, $12,730 for taxpayers with one qualifying child, and $17,880 for taxpayers with two or more qualifying children.
For 2025, the phaseout of the allowable earned income tax credit will begin at $17,730 for joint filers with no qualifying children ($10,620 for others with no qualifying children), and at $30,470 for joint filers with one or more qualifying children ($23,350 for others with one or more qualifying children).
Observation: Taxpayers must use IRS tables to determine the amount of their earned income tax credit. While these tables are based on the inflation-adjusted figures set out above, because the credit under the tables is the same for everyone within a $50 range, there may be slight differences between the credit under the tables and the credit the taxpayer would determine using those inflation-adjusted figures.
The amount of disqualified income (generally investment income) a taxpayer may have before losing the entire earned income tax credit is $11,950 for 2025.
Refundable child credit. The child credit is refundable, subject to the limit described below, to the extent of the greater of:
. . . 15% of earned income above $2,500, or
. . . for taxpayers with three or more qualifying children, the excess of the taxpayer’s social security taxes for the tax year over his or her earned income tax credit for the year. (Code Sec. 24(d))
The refundable portion of the child tax credit for any qualifying child can’t exceed $1,700 for 2025.
Low-income housing credit figures. For 2025, the per low-income qualified basis amount under Code Sec. 42(e)(3)(A)(ii) is $8,500 ($8,300 for 2024). The population component of the state low-income housing credit ceiling dollar amount under Code Sec. 42(h)(3)(C)(ii) for 2025 is the greater of: (1) $3.00 ($2.90 for 2024) multiplied by the state population, or (2) $3,455,000 ($3,360,000 for 2024).
Capital gains. For 2025, the capital gains tax rates will be as follows:
The 0% capital gains rate applies to adjusted net capital gain of up to:
. . . Joint returns and surviving spouses—$96,700 ($94,050 in 2024)
. . . Single filers and married taxpayers filing separately—$48,350 ($47,025 in 2024)
. . . Heads of household—$64,750 ($63,000 in 2024)
. . . Estates and trusts—$3,250 ($3,150 in 2024)
The 15% capital gains tax rate applies to adjusted net capital gain over the amount subject to the 0% rate, and up to:
. . . Joint returns and surviving spouses—$600,050 ($583,750 in 2024)
. . . Married taxpayers filing separately—$300,000 ($291,850 in 2024)
. . . Heads of household—$566,700 ($551,350 in 2024)
. . . Single filers—$533,400 ($518,900 in 2024)
. . . Estates and trusts—$15,900 ($15,450 in 2024)
The 20% capital gains tax rate applies to adjusted net capital gain over the above 15% maximum amounts.
Income-based limitations on Sec. 199A qualified business income deduction. For 2025, taxpayers with taxable income above $197,300 for single and head of household returns, $394,600 for joint filers, and $197,300 for married filing separate returns are subject to certain limitations on the Code Sec. 199A deduction. The 2024 amounts were $191,950, $383,900, and $191,950.
MAGI limits for making deductible contributions by active plan participants to traditional IRAs. In general, an individual who isn’t an active participant in certain employer-sponsored retirement plans, and whose spouse isn’t an active participant, may make an annual deductible cash contribution to an IRA up to the lesser of: (1) an inflation-adjusted statutory dollar limit, or (2) 100% of the compensation that’s includible in his or her gross income for that year. For 2025, the statutory dollar limit is $7,000 ($7,000 in 2024), plus an additional $1,000 catch-up for those age 50 or older ($1,000 in 2024).
If the individual (or his or her spouse) is an active plan participant, the deduction phases out over a specified dollar range of MAGI. For taxpayers filing joint returns, the otherwise allowable deductible contribution will be phased out ratably for 2025 for MAGI between $126,000 and $146,000 ($123,000 and $143,000 in 2024).
For 2025, for single taxpayers and heads of household, the otherwise allowable deductible contribution will be phased out ratably for MAGI between $79,000 and $89,000 ($77,000 and
$87,000 in 2024). For married taxpayers filing separate returns, the otherwise allowable deductible contribution will be phased out ratably for MAGI between $0 and $10,000 ($0 and $10,000 in 2024).
For a married taxpayer who is not an active plan participant but whose spouse is such a participant, the otherwise allowable deductible contribution will be phased out ratably for 2025 for MAGI between $236,000 and $246,000 ($230,000 and $240,000 in 2024).
MAGI limits for making contributions to Roth IRAs. Individuals may make nondeductible contributions to a Roth IRA, subject to the overall limit on IRA contributions.
The maximum annual contribution that can be made to a Roth IRA is phased out for taxpayers with MAGI over certain levels for the tax year. For taxpayers filing joint returns, the otherwise allowable contributions to a Roth IRA will be phased out ratably for 2025 for MAGI between $236,000 and $246,000 ($230,000 and $240,000 in 2024).
For single taxpayers and heads of household, it will be phased out ratably for MAGI between $150,000 and $165,000 ($146,000 and $161,000 in 2024). For married taxpayers filing separate returns, the otherwise allowable contribution will continue to be phased out ratably for MAGI between $0 and $10,000 ($0 and $10,000 in 2024).
Sec. 179 expensing. The amount that may be expensed under Code Sec. 179 for 2025 will be $1,250,000 ($1,220,000 for 2024). For 2025, the expensing limit will be reduced when more than $3,130,000 of expensing-eligible property is placed in service ($3,050,000 for 2024).
Unified estate and gift tax exclusion amount. For gifts made and estates of decedents dying in 2025, the exclusion amount will be $13,990,000 ($13,610,000 for gifts made and estates of decedents dying in 2024).
Generation-skipping transfer (GST) tax exemption. The exemption from GST tax will be $13,990,000 for transfers in 2025 ($13,610,000 for transfers in 2024).
Gift tax annual exclusion. For gifts made in 2025, the gift tax annual exclusion will be $19,000 ($18,000 in 2024).
Foreign earned income and housing cost exclusion. The foreign earned income exclusion amount will be $130,000 in 2025 ($126,500 in 2024). The foreign housing cost exclusion will be $18,200 in 2025 (up from $17,710 in 2024).
Failure to file tax return. For 2025, the minimum penalty under Code Sec. 6651(a) for failure to timely file a tax return is $525 ($510 in 2024).
Failure to file partnership return. For 2025, the dollar amount used to determine the amount of the penalty under Code Sec. 6698(b)(1) is $255 ($245 in 2024).
Failure to file S corporation return. The dollar amount used to determine the amount of the penalty under Code Sec. 6699(b)(1) is $255 ($245 in 2024).
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