At the end of each year, the Internal Revenue Service issues a list of new cost of living adjustments to various taxes, which will take effect at the commencement of the year. With inflation slowing, the changes being ushered in for 2025 are not as dramatic as those we saw in 2024. Below is a list of some of the notable tax changes for 2025:
Standard Deduction
The standard deduction will increase only slightly for all taxpayers to the following numbers:
- $15,000 for single taxpayers (an increase of $400);
- $30,000 for married couples filing jointly (an increase of $800); and
- $22,500 for heads of households (an increase of $600).
Marginal Tax Rates
The highest marginal tax rate (37% federal) will now apply to income greater than $626,350 ($751,600 for married couples). This amounts to an increase of $17,000 for single taxpayers and $20,400 for married couples.
Estate and Gift Tax Exemption
The lifetime estate and gift tax exemption will increase from $13,610,000 per person ($27,220,000 per couple) to $13,990,000 per person ($27,980,000 per couple).
Annual Gift Tax Exclusion
The annual gift tax exclusion, the maximum amount that a taxpayer may give to any individual in any year without using any portion of the taxpayer’s lifetime gift tax exemption, increases from $18,000 to $19,000.
Here is a link to the complete list of tax changes taking effect on January 1, 2025. With a Republican administration and a Republican-controlled Congress taking office early next year, stay tuned for potentially significant changes to many tax laws. Ferruzzo’s tax attorneys can help navigate the ever-changing tax landscape.
Note: This article is not meant to provide specific legal advice. For advice specific to your estate, please contact any of the attorneys in our Corporate and Real Estate Practice Group who are ready to assist you.
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Partner in the firm's Corporate and Real Estate Practice Group