Individual Tax Services

What are the Latest Tax Updates?

• How Much Can You Contribute to Your Retirement Plan in 2025? The IRS Just Revealed the Answer
• 2025 Tax Calendar
• Disaster Victims May Qualify for Tax Relief…Including on Amended Returns
• President Trump’s Tax Plan: What Proposals are Being Discussed in Washington?
• How Will the 2025 Inflation Adjustment Numbers Affect Your Year-End Tax Planning?
• IRS Issues Final Regulations on Inherited IRAs

What are the 2025 Tax Rates and Deductions?

Individual Tax Rate

• 2025 Tax Due Date Calendar
• 2025 Federal Tax Rates

Tax-bracket thresholds increase for each filing status but, because they’re based on percentages, they increase more significantly for the higher brackets.

Standard Deduction

• Single: $15,000
• Head of Household: $22,500
• Married Filing Jointly or Surviving Spouse: $30,000
• Married Filing Separately: $15,000

Alternative Minimum Tax (AMT)

• The AMT exemptions are also indexed for 2025:
  • Single or Head of Household: $88,100
  • Married Filing Jointly: $137,000
  • Married Filing Separately: $68,500
• AMT Exemption Phaseouts Based on AMT Income:
  • Single or Head of Household: $626,350 - $978,750
  • Married Filing Jointly: $1,252,700 - $1,800,700
  • Married Filing Separately: $626,350 - $900,350

Estate and Gift Tax Exemption

The lifetime exemption is $13,990,000 with a top tax rate of 40%. A surviving spouse may be able to use the deceased spouse’s unused estate tax exemption. The annual gift tax exclusion is $19,000 per recipient ($38,000 if spouses elect "split-gift" treatment).

Education and Child-Related Breaks

• The American Opportunity Credit: Maximum credit per eligible student is $2,500 and is phased out for taxpayers with adjusted gross income in the following ranges:
  • Single/Head of Household: $80,000 - $90,000
  • Married Filing Jointly: $160,000 - $180,000
• The Lifetime Learning Credit: Maximum credit is $2,000 per tax return and is phased out for taxpayers with adjusted gross income in the following ranges:
  • Single/Head of Household: $80,000 - $90,000
  • Married Filing Jointly: $160,000 - $180,000
• Student Loan Interest Deduction: Maximum credit is $2,500 per tax return and is phased out for taxpayers with adjusted gross income in the following ranges:
  • Single/Head of Household: $85,000 - $100,000
  • Married Filing Jointly: $170,000 - $200,000

FICA Rates and Additional Medicare Tax

The rate for the employee portion of Social Security tax is 6.2%, and the maximum earned income it applies to is $176,100, while the Medicare rate is 1.45% and applies to all earned income.

Self-employed individuals pay both the employee and employer portions, but get a deduction for the employer portion.

Cash wages totaling $2,800 or more to a household employee are also subject to FICA taxes.

An additional 0.9% Medicare tax applies to FICA wages and self-employment income exceeding $200,000 (singles and heads of households), $250,000 (joint filers) or $125,000 (separate filers).

Employers must withhold the additional Medicare tax beginning in the pay period when wages exceed $200,000 for the calendar year, without regard to an employee’s filing status.

Retirement Savings Changes for 2025

The IRS recently announced cost-of-living adjustments that apply to the dollar limitations for pensions, as well as other qualified retirement plans for 2025. The amounts increased more than they have in recent years due to inflation.

401(k) Plans

The 2025 contribution limit for employees who participate in 401(k) plans will increase to $23,500 (up from $23,000 in 2024). This contribution amount also applies to 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan.

The catch-up contribution limit for employees age 50 and over who participate in 401(k) plans and the other plans mentioned above will remain at $7,500.

SEP Plans and Defined Contribution Plans

The limitation for defined contribution plans, including a Simplified Employee Pension (SEP) plan, will increase from $69,000 to $70,000. To participate in a SEP, an eligible employee must receive at least a certain amount of compensation for the year.

SIMPLE Plans

Limit on Contributions to SIMPLE Plans: $16,500

Limit on Catch-Up Contributions to SIMPLE Plans: $3,500 ($5,250 for taxpayers ages 60, 61, 62, or 63 by the end of 2025)

Other Plan Limits

The IRS also announced that in 2025:

• The limitation on the annual benefit under a defined benefit plan will increase from $275,000 to $280,000. For a participant who separated from service before January 1, 2025, the participant’s limitation under a defined benefit plan is computed by multiplying the participant’s compensation limitation, as adjusted through 2024, by 1.0262.
• The limitation used in the definition of “highly compensated employee” will increase from $155,000 to $160,000.

IRA Contributions

The 2025 limit on annual contributions to an individual IRA will stay at $7,000. The IRA catch-up contribution limit for individuals age 50 and older isn’t subject to an annual cost-of-living adjustment and will remain $1,000.

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