New Income Tax Brackets and Federal Tax Rates for 2025
In the U.S., your income tax rate depends on your taxable income and filing status, which places you into one of seven tax brackets that range from 10% to 37%. These rates remain consistent each year. However, to keep pace with inflation, the IRS adjusts the income thresholds for each tax bracket yearly – a process known as inflation indexing. These annual adjustments help prevent “bracket creep,” where inflation alone could push taxpayers into higher brackets without an actual increase in their purchasing power.
For 2024 and 2025, the IRS has updated these income thresholds and made other key adjustments to deductions, credits, and exclusions. These updates may impact your tax obligations and provide new planning opportunities. Here’s an in-depth look at the latest tax brackets and additional updates that could shape your filing in the coming years.
Updated Federal Income Tax Brackets for 2024 and 2025
Tax brackets determine the percentage of your income that you owe in taxes, and they often change to keep pace with inflation and economic shifts. Currently, there are seven tax rates ranging from 10% to 37%, which work ‘’progressively’. In other words, you pay higher rates as your income increases. To know your tax bracket, consider your filing status and taxable income.
Here is a side-by-side comparison of the tax years 2024 (due in April 2025) and 2025 (due in April 2026) income tax brackets for each filing status.
2024 vs 2025 Income Tax Brackets for Single Filers
| Tax Rate | 2024 Income Bracket | 2025 Tax Bracket |
| 10% | $0 to $11,600 | $0 to $11,925 |
| 12% | $11,601 to $47,150 | $11,926 to $48,475 |
| 22% | $47,151 to $100,525 | $48,476 to $103,350 |
| 24% | $100,526 to $191,950 | $103,351 to $197,300 |
| 32% | $191,951 to $243,725 | $197,301 to $250,525 |
| 35% | $243,726 to $609,350 | $250,526 to $626,350 |
| 37% | $609,351 or above | $626,351 or more |
2024 vs 2025 Income Tax Brackets for Married Filing Jointly
| Tax Rate | 2024 Income Bracket | 2025 Income Bracket |
| 10% | $0 to $23,220 | $0 to $23,850 |
| 12% | $23,221 to $94,300 | $23,851 to $96,950 |
| 22% | $94,301 to $201,050 | $96,951 to $206,700 |
| 24% | $201,051 to $383,900 | $206,701 to $394,600 |
| 32% | $383,901 to $487,450 | $394,601 to $501,050 |
| 35% | $487,451 to $731,200 | $501,051 to $751,600 |
| 37% | $731,201 or above | $751,601 or more |
2024 vs 2025 Income Tax Brackets for Married Filing Separately/ Qualifying Widow
| Tax Rate | 2024 Income Bracket | 2025 Income Bracket |
| 10% | $0 to $11,600 | $0 to $11,925 |
| 12% | $11,601 to $47,150 | $11,926 to $48,475 |
| 22% | $47,151 to $100,525 | $48,476 to $103,350 |
| 24% | $100,525 to $191,950 | $103,351 to $197,300 |
| 32% | $191,951 to $243,725 | $197,301 to $250,525 |
| 35% | $243,726 to $365,600 | $250,526 to $375,800 |
| 37% | $365,601 or above | $375,801 or more |
2024 vs 2025 Income Tax Brackets for Head of Household
| Tax Rate | 2024 Income Bracket | 2025 Income Bracket |
| 10% | $0 to $16,550 | $0 to $17,000 |
| 12% | $16,551 to $63,100 | $17,001 to $64,850 |
| 22% | $63,101 to $100,500 | $64,851 to $103,350 |
| 24% | $100,501 to $191,950 | $103,351 to $197,300 |
| 32% | $191,951 to $243,700 | $197,301 to $250,500 |
| 35% | $243,701 to $609,350 | $250,501 to $626,350 |
| 37% | $609,351 or above | $626,351 or more |
How Tax Brackets Work
Contrary to a common misconception, your entire income isn’t taxed at a single rate. Instead, the tax system operates on a marginal basis. It means different portions of your income are taxed at different rates. Let’s break it down with an example.
Let’s say you’re a single filer with a taxable income of $80,000 in 2024. While your total income places you in the 22% tax bracket, it doesn’t mean the entire $80,000 is subject to a flat 22% tax rate. Instead, you’re paying different rates on different chunks of your income.
Here’s the breakdown:
- The first $11,600 is taxed at a rate of 10 percent, resulting in $1,160.
- The next portion, $11,601 to $47,150, is taxed at 12 percent, resulting in $4,265.88
- The remaining income, $47,151 to $80,000, is taxed at 22 percent, resulting in $7226.78
By adding these amounts, your total tax liability would be $12,652.66 without factoring in any itemized or standard deduction.
Standard Deductions for 2024 and 2025
The standard deduction has increased to keep up with inflation, providing taxpayers with an automatic deduction amount that can reduce taxable income. Here’s how the changes look:
| Filing Status | 2024 Standard Deduction | 2025 Standard Deduction |
| Single/ Married Filing Separately | $14,600 | $15,000 |
| Married Filing Jointly | $29,200 | $30,000 |
| Head of Household | $21,900 | $22,500 |
By taking the standard deduction, you simplify the filing process without needing to itemize. Many taxpayers find this deduction advantageous, but if your allowable itemized deductions exceed this amount, it might be worth itemizing instead.
Alternative Minimum Tax (AMT) Exemption
The AMT ensures that high-income taxpayers pay their fair share by setting a minimum tax threshold. While this was initially targeted at very high earners, it’s since expanded to cover more individuals.
| Filing Status | 2024 AMT Exemption | 2025 AMT Exemption |
| Single/ Head of Household | $85,700 | $88,100 |
| Married Filing Separately | $66,650 | $68,500 |
| Married Filing Jointly | $133,300 | $137,000 |
Income above these exemption amounts may be subject to the AMT if it exceeds the standard tax calculation. The rate itself is either 26% or 28% based on your income level.
Earned Income Tax Credit (EITC)
This credit benefits low- to moderate-income earners by reducing taxes owed and potentially leading to a refund. The credit amounts vary based on your income, filing status, and the number of dependents you claim.
Earned Income Tax Credit 2024 (Filed in 2025)
| Number of children | Maximum Earned Income Tax Credit | Maximum Income: Single or Head of Household | Maximum income: Married Filing Jointly |
| 0 | $632 | $18,591 | $25,511 |
| 1 | $4,213 | $49,084 | $56,004 |
| 2 | $6,960 | $55,768 | $62,688 |
| 3 or more | $7,830 | $59,899 | $66,819 |
Earned Income Tax Credit 2025 (Filed in 2026)
| Number of children | Maximum Earned Income Tax Credit | Maximum Income: Single or Head of Household | Maximum income: Married Filing Jointly |
| 0 | $649 | $19,104 | $26,214 |
| 1 | $4,328 | $50,434 | $57,554 |
| 2 | $7,152 | $57,310 | $64,430 |
| 3 or more | $8,046 | $61,555 | $68,675 |
Foreign Earned Income Exclusion (FEIE)
If you live and work outside the U.S., the Foreign Earned Income Exclusion (FEIE) allows you to exclude a portion of your foreign income from U.S. taxation. To qualify, you must meet either the physical presence test or the bona fide residence test. If you’re living abroad, this exclusion can help significantly lower your U.S. tax liability.
| Tax Year | Foreign Earned Income Exclusion Amount |
| 2024 | $126,500 |
| 2025 | $130,000 |
Estate Tax Credits
For individuals with significant estates, the estate tax credit offers relief by shielding a large portion of an estate from federal taxation. The basic exclusion amount for estate tax purposes has been adjusted for 2024 and 2025. Only the value of an estate exceeding this exclusion threshold will be subject to federal estate tax.
| Tax Year | Estate Tax Exclusion Amount |
| 2024 | $13,610,000 |
| 2025 | $13,990,000 |
Annual Exclusion for Gifts
If you plan to make gifts as part of your financial strategy, the annual exclusion for gifts has increased. It lets you transfer assets to family members or friends without incurring gift tax. This exclusion is a smart way to pass wealth while minimizing tax exposure.
| Tax Year | Annual Exclusion Per Recipient |
| 2024 | $18,000 |
| 2025 | $19,000 |
Six Smart Strategies to Lower Your Taxable Income
Nobody likes paying more taxes than necessary, and there are legitimate ways to optimize your financial situation. Here are some tips to help you move into a lower tax bracket and reduce your overall tax bill.
1. Claim Tax Credits
Tax credits are a great way to lower your tax bill since they directly reduce the amount you owe. Look into credits like the Child Tax Credit if you’re a parent, the Earned Income Tax Credit (EITC) if you’re a low- to moderate-income earner, or the Lifetime Learning Credit if you’re paying for education. Each of these credits has eligibility requirements and income thresholds, so check if you qualify and leverage them fully.
2. Contribute to Retirement Accounts
Putting money into retirement accounts can lower your taxable income now and help you build a nest egg for the future. Contributions to a 401(k) or Traditional IRA are often tax-deductible, meaning they reduce your income in the year you contribute. If you’re close to a higher tax bracket, maxing out these accounts might help you stay in a lower bracket.
3. Maximize Deductions
Deductions reduce the income you pay taxes on, so it’s important to take advantage of any that apply to you. If you have significant expenses like charitable donations, mortgage interest, or medical bills, itemizing your deductions might save you more than the standard deduction. If your itemized deductions are close to the standard deduction, consider “bunching” your expenses. This means grouping extra expenses into a single year to exceed the standard deduction threshold and increase your tax savings.
4. Utilize Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)
HSAs and FSAs can help you save on medical expenses while lowering your taxable income. With an HSA, you can contribute pre-tax money, let it grow tax-free, and withdraw it tax-free for qualified medical expenses. Unused HSA funds roll over every year. FSAs work similarly, but the money must be used within the year. Both are great options for saving money for healthcare costs while reducing your tax bill.
5. Consider Tax-Efficient Investments
Certain investments are more tax-friendly than others. For example, long-term capital gains (on assets held over a year) and qualified dividends are usually taxed at a lower rate than regular income. Also, tax-loss harvesting (selling investments at a loss to offset gains) can help you reduce your taxable income.
6. Review Your Filing Status
Your filing status can make a big difference in your taxes. Married couples might want to file separately if one person has a lot of deductible expenses. And if you’re single with dependents, you might qualify for Head of Household status. This gives you a higher standard deduction and lower tax rates than filing as a single person. It’s worth seeing which filing status gives you the best outcome.
Save More with Tax Samaritan
As the new tax year unfolds, staying updated on changes in tax laws is important for effective tax planning and minimizing your tax burden. While this guide provides valuable insights, we highly advise contacting a tax professional for personalized advice. Each tax situation is different and requires a unique solution.
If you have any questions or concerns about the recent tax changes or require assistance with your tax filing, don’t hesitate to contact us at Tax Samaritan. If you would like a quote, please click the button below to answer a few basic questions to help us understand your tax situation and filing requirements.