IRS Update 2025: New Inflation-Adjusted Amounts
What’s Changing in Your Taxes
Every year, the Internal Revenue Service (IRS) updates tax figures to reflect inflation through the IRS Inflation Adjustments. These changes determine how much you can earn before paying higher taxes, how much you can deduct with the 2025 Standard Deduction, and how you should plan your spending and contributions as part of your 2025 Tax Planning Strategy.
For the 2025 tax year, which will be filed during the 2026 tax season, increases in deductions and tax brackets (Federal Tax Rates) bring good news for most taxpayers: more income will be tax-free.
If you work, own a business, or manage properties in Houston, this guide will help you understand how to apply the new values within your 2025 Tax Planning Strategy.
1. The Standard Deduction Increases Again
The Standard Deduction is the amount you can automatically subtract from your income before calculating your taxes.
In 2025, the IRS increased it to offset rising prices according to the 2025 IRS Inflation Adjustments:
Filing Status 2025 Deduction Increase vs. 2024
Single or Married Filing Separately $15,000 Increased by $400
Married Filing Jointly $30,000 Increased by $800
Head of Household $22,500 Increased by $600
What does this mean?
If your income is the same as last year, you’ll pay less in taxes because a larger portion is now exempt thanks to the 2025 Standard Deduction. For example, if you earn $70,000 and are single, you’ll now be taxed on $55,000 instead of $55,400.
2. Wider Tax Brackets: Less Risk of “Bracket Creep”
Federal income tax rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, but the income limits for each bracket have increased to prevent small salary raises from pushing you into a higher tax rate.
The 22% bracket now starts at $48,475 (previously $47,150) for single filers.
For married couples filing jointly, that same bracket begins at $96,950.
The 37% rate applies starting at $626,350 (single) and $751,600 (married).
If you receive a raise or bonus this year, you might stay in the same tax bracket, avoiding higher taxes caused by inflation. These 2025 Federal Tax Rates changes present an opportunity for those planning their taxes early.
3. More Generous Tax Credits for Families and Workers
Tax credits directly reduce the amount you owe to the IRS.
Some will increase in 2025 under the new 2025 IRS Inflation Adjustments:
Earned Income Tax Credit (EITC): Up to $8,046 (previously $7,830) for families with three or more children.
Adoption Credit: $22,500.
Foreign Earned Income Exclusion: $130,000.
FSA Account: Limit of $3,300 (for pre-tax medical expenses).
Transportation Benefit: $325 per month (for parking or public transit).
Example:
If you have three children and qualify for the EITC, you could receive up to $216 more in 2025 compared to 2024.
Small adjustments like these can mean hundreds of dollars in savings on your refund specially if your CPA helps you apply them correctly.
Jambrina LifeHack: If you have a mortgage, made donations, or paid high medical expenses, you may reduce your taxes even more by itemizing. Your Bilingual CPA can help you determine whether itemizing or taking the Standard Deduction is more beneficial within your 2025 Tax Planning Strategy.
How to Take Advantage of the Adjustments Before the End of 2025
The key to effective tax planning is to take action before December 31, 2025. Some actions recommended by the IRS and tax experts in Houston Taxes include:
Review your withholdings: Use the IRS Tax Withholding Estimator to make sure you’re paying the right amount.
Increase your retirement contributions: 401(k) up to $23,500; IRA up to $7,000.
Evaluate charitable donations or deductible investments.
If you own a business, consult your Bilingual CPA about depreciation, credits, and deductions under Section 179.
Example: Buying or placing new equipment in service before December 31 could allow you to deduct 100% of the cost in 2025, taking advantage of the benefits of the 2025 IRS Inflation Adjustments.
Inflation Directly Affects Your Taxes
The new IRS limits for 2025 will directly impact what you pay or save next year. With a clear Tax Planning Strategy and professional guidance, you can leverage increases in deductions and credits to optimize your tax burden.
Get ahead with Jambrina CPA
At Jambrina CPA, we help individuals and businesses adapt to changes, create personalized tax strategies, and keep their taxes up to date, all with the support of a Bilingual CPA who explains every step clearly and correctly applies the IRS Inflation Adjustments, 2025 Federal Tax Rates, and the 2025 Standard Deductions.