IRS 2025 Tax Updates: Essential Information for Tax Filers

We hope this newsletter finds you well. The IRS has recently released its Revenue Procedure 2024-40, outlining the inflation adjustments for 2025 that will impact tax returns filed in 2026. Here are the key changes you need to know:

Standard Deductions for 2025

• Single Taxpayers & Married Filing Separately: $15,000 (up $400 from 2024)
• Married Couples Filing Jointly: $30,000 (up $800 from 2024)
• Heads of Household: $22,500 (up $600 from 2024)

Marginal Tax Rates

For individual single taxpayers and married couples filing jointly, the tax rates for 2025 are as follows:

• 37% for incomes over $626,350 ($751,600 for married couples)
• 35% for incomes over $250,525 ($501,050 for married couples)
• 32% for incomes over $197,300 ($394,600 for married couples)
• 24% for incomes over $103,350 ($206,700 for married couples)
• 22% for incomes over $48,475 ($96,950 for married couples)
• 12% for incomes over $11,925 ($23,850 for married couples)
• 10% for incomes $11,925 or less ($23,850 or less for married couples)

Medical Savings Accounts

For 2025, the requirements for Medical Savings Accounts are as follows:

• Self-only Coverage: Deductible must be between $2,850 and $4,300 (up $50 and $150 from 2024, respectively). Max out-of-pocket: $5,700 (up from $5,550).
• Family Coverage: Deductible must be between $5,700 and $8,550 (up $150 and $200, respectively). Max out-of-pocket: $10,500 (up from $10,200).

Other Notable Changes

• Earned Income Tax Credit Maximum: $8,046 (up from $7,830)
• Annual Exclusion for Gifts: $19,000 (up $1,000)
• Estate Tax Basic Exclusion Amount: $13,990,000 (up from $13,610,000)
• Alternative Minimum Tax Exemption: $88,100 for unmarried individuals; $137,000 for married couples (phase-out starts at $626,350 and $1,252,700, respectively).
• Health Flexible Spending Arrangements: Contribution limit raised to $3,300 (up $100).

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IRS Updates on Medical Expenses

The IRS has included certain contraceptives as deductible medical expenses and preventative care benefits, enhancing health coverage options.

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In Conclusion

At RSK Tax and Consulting, LLC, we are committed to keeping you informed about important tax updates and providing personalized services to meet your needs. If you have any questions or would like to discuss how these changes might affect you, please don’t hesitate to reach out.

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