INTEL · December 02, 2024

Annual Tax Changes: Your 2025 Reference Guide

Nerre Shuriah

JD, LLM, CM&AA | Senior Director of Wealth Planning

First Citizens Wealth INTEL: Insights and News—Taxation, Election & Legislation

Each month, we'll cover time-sensitive updates on tax, election and legislation developments that could affect you.

To counteract the impact inflation may have on taxpayers, the IRS recently made its annual adjustments to 2025 tax provisions. The yearly changes are an ongoing effort to prevent inflation from inequitably moving taxpayers into higher tax brackets.

More than 60 changes were made this year, including standard deductions, marginal rates and alternative minimum tax exemptions. Here's a summary of the significant adjustments for the 2025 tax year for returns filed in 2026.

Who is impacted

Taxpayers filing a return in 2026 for the 2025 tax year will need to adhere to these IRS adjustments. To provide a sense of the scale of the changes, 2024 tax year figures are included in the tables below for most of the categories.

Standard deductions

2025 Deductions

2024 Deductions

Individual

$15,000

$14,600

Married filing separately

$15,000

$14,600

Married filing jointly

$30,000

$29,200

Head of household

$22,500

$21,900

Marginal tax rates

2025 Rates

Individual income

Married filing jointly income

10%

$11,925 or less

$23,850 or less

12%

Over $11,925

Over $23,850

22%

Over $48,475

Over $96,950

24%

Over $103,350

Over $206,700

32%

Over $197,300

Over $394,600

35%

Over $250,525

Over $501,050

37%

Over $626,350

Over $751,600

Alternative minimum tax exemptions

2025 Exemption Amounts

Individual

$88,100—begins to phase out at $626,350

Married filing separately

$68,650—begins to phase out at $626,350

Married filing jointly

$137,000—begins to phase out at $1,252,700

Earned income tax credits

2025 Credits

2024 Credits

Qualifying taxpayers with three or more qualifying children

$8,046

$7,830

Additional stipulations apply. Explore the October 2025 IRS news release for additional details.

Adoption credits

2025 Credits

2024 Credits

Adoption of a child with special needs

Up to $17,280

Up to $16,810

Additional stipulations apply. Explore the October 2025 IRS news release for additional details.

Health flexible spending plans

2025 Limitations

2024 Limitations

Contributions to employee health flexible spending plans

$3,300

$3,200

Medical savings accounts

2025 Amount

2024 Amount

Deductible—individual coverage

Between $2,850 and $4,300

Between $2,800 and $4,150

Maximum out-of-pocket expense—individual

$5,700

$5,550

Deductible—family

Between $5,700 and $8,550

Between $5,550 and $8,350

Maximum out-of-pocket expense—family

$10,500

$10,200

Other exclusions

2025 Exclusion

2024 Exclusion

Foreign earned income

$130,000

$126,500

Estate tax

$13,990,000

$13,610,000

Annual exclusion for gifts

$19,000

$18,000

What action is required—and when

The IRS adjustments go into effect for the 2025 tax year, so tax returns filed in 2026 will be required to comply with the changes. To understand how the changes will impact your tax strategies for the coming year and allow ample time to adjust, we recommend speaking with your financial team before tax season.

Who you should talk to now

Given the number of tax adjustments taking place and the range of categories they affect, reviewing the October 2025 IRS news release is a prudent next step. For more detailed information regarding the latest IRS tax changes and their potential impact on your 2025 financial plan, contact a First Citizens wealth consultant today.

Talk to a Wealth Consultant

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