Tax Law and News

Annual inflation adjustments for TY24 and TY25

Written by Nadia Rodriguez, CPA
Published Dec 20, 2024
4 min read

The following chart outlines the year over year inflation adjustments on some higher impact provisions of the tax code. You can refer to these figures in planning for tax year 2025 and consider sharing with your individual and business tax clients. Also refer to the resources at the bottom for additional adjustments, and refer to an article published previously that focused on tax years 2023 and 2024.

	Tax Year 2024	Tax Year 2025
Standard deduction	Married filing jointly: $29,200Single taxpayers and married individuals filing separately: $14,600Heads of households: $21,900	Married filing jointly: $30,000Single taxpayers and married individuals filing separately: $15,000Heads of households: $22,500
Personal exemption	$0	$0
Tax rates and brackets	Top rate is 37 percent for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly).35 percent, for incomes over $243,725 ($487,450 for married couples filing jointly)32 percent for incomes over $191,150 ($383,900 for married couples filing jointly)24 percent for incomes over $100,525 ($201,050 for married couples filing jointly)22 percent for incomes over $47,150 ($94,300 for married couples filing jointly)12 percent for incomes over $11,600 ($23,200 for married couples filing jointly)Lowest rate is 10 percent for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly)	Top rate is 37 percent for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly).35 percent, for incomes over $250,525 ($501,050 for married couples filing jointly)32 percent for incomes over $197,300 ($394,600 for married couples filing jointly)24 percent for incomes over $103,350 ($206,700 for married couples filing jointly)22 percent for incomes over $478,475 ($96,950 for married couples filing jointly)12 percent for incomes over $11,925 ($23,850 for married couples filing jointly)Lowest rate is 10 percent for incomes of single individuals with incomes of $11,925 or less ($23,850 for married couples filing jointly)
Alternative minimum tax exemption	$85,700 for single individuals and begins to phase out at $609,350$133,300 for married couples filing jointly and begins to phase out at $1,218,700	$88,100 for single individuals and begins to phase out at $626,350$137,000 for married couples filing jointly and begins to phase out at $1,252,700
Penalty for not maintaining minimum essential health	$0	$0
Dollar limitation for employee salary reductions for contributions to health flexible spending arrangements	$3,200	$3,300
Adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit	$160,000	$160,000
Maximum credit allowed for adoptions	$16,810	$17,280
Foreign earned income exclusion	$126,500	$130,000
Basic exclusion amount for estates of decedents	Estates of decedents who die during 2024: $13,610,000	Estates of decedents who die during 2025: $13,990,000
Annual exclusion for gifts	$18,000	$19,000
Standard mileage rates for the use of a car (also vans, pickups or panel trucks)	67 cents per mile driven for business use,21 cents per mile driven for medical or moving purposes, and14 cents per mile driven in service of charitable organizations	70 cents per mile driven for business use,21 cents per mile driven for medical or moving purposes, and14 cents per mile driven in service of charitable organizations
Monthly limit on qualified transportation fringe benefits & qualified parking	$315	$325
Contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan	$23,000	$23,500
Catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan	$7,500	$7,500
Limit on annual contributions to an IRA	$7,000	$7,000
Catch-up contribution limit for individuals aged 50 and over (IRA)	$1,000	$1,000
If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income	For single taxpayers covered by a workplace retirement plan, the phase-out range is: $77,000 to $87,000For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is: $123,000 to $143,000For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains: $0 to $10,000	For single taxpayers covered by a workplace retirement plan, the phase-out range is: $79,000 to $89,000For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is: $126,000 to $146,000For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains: $0 to $10,000
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between:	$230,000 and $240,000	$236,000 and $246,000
Income phase-out range for taxpayers making contributions to a Roth IRA:	For singles and heads of household: $146,000 to $161,000For married couples filing jointly, the income phase-out range is: $230,000 to $240,000The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains: $0 to $10,000	For singles and heads of household: $150,000 to $165,000For married couples filing jointly, the income phase-out range is: $236,000 to $246,000The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains: $0 to $10,000
Income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers	Married couples filing jointly: $76,500Heads of household: $57,375Singles and married individuals filing separately: $38,250	Married couples filing jointly: $79,000Heads of household: $59,250Singles and married individuals filing separately: $39,500
SIMPLE retirement contribution limit	$16,000	$16,500

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Nadia Rodriguez, a senior tax analyst programmer at Intuit®, is part of the team that builds Intuit ProConnect™ Tax Online and Lacerte™ content for tax professionals who serve individuals and small businesses. She earned her master’s degree in taxation in 2007 and her CPA license in 2009. In 2022, Nadia was named as one of the “20 Under 40” Top Influencers for leading the development of technology, education, or services that enhance the accounting profession. Nadia has experience in public accounting, where she performed tax planning projections, and prepared tax returns for high net-worth individuals and different types of businesses. Today, Nadia runs her tax practice where she provides her clients with tax preparation and tax advisory services. More from Nadia Rodriguez, CPA