The IRS has announced inflation-based adjustments to tax brackets and standard deductions for 2025. These changes are designed to prevent “bracket creep,” where taxpayers end up in higher tax brackets due to inflation rather than an actual increase in their income.
What’s Changing?
- Standard Deduction Increases: For single filers, it rises to $15,000; for joint filers, it jumps to $30,000.
- Tax Bracket Adjustments: Income thresholds for tax rates have increased, reducing the likelihood of moving into a higher bracket due to cost-of-living increases.
Why It Matters
If you’re earning more due to inflation-related salary increases, these adjustments can help keep your tax bill in check. However, proper tax planning is essential to ensure you’re maximizing your savings opportunities.
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