With January fast approaching and inflation affecting American financial situations, taxpayers nationwide are gearing up to file in 2025.

To facilitate this process, the Internal Revenue Service (IRS) annually announces inflation adjustments, covering over 60 tax provisions.

The IRS shared details for the tax year 2024 last year, prompting taxpayers to closely examine the standard deduction amounts for individuals and couples.

For individual taxpayers and those married filing separately, the standard deduction has increased to $14,600, which is a rise of $750 from the previous year, according to the IRS. Meanwhile, for married couples filing jointly, the deduction has gone up to $29,200, which is $1,500 more than in 2023. The standard deduction for heads of households has also seen a boost, now totaling $21,900 after a $1,100 increase.

Below are additional adjustments to consider this tax season.

IRS tax rates for tax year 2024

The IRS has outlined tax rates for its seven tax brackets for the tax year 2024:

• 37% – Single income exceeding $609,350 and married couples filing jointly with income above $731,200
• 35% – Single income exceeding $243,725 and married couples filing jointly with income above $487,450
• 32% – Single income exceeding $191,950 and married couples filing jointly with income above $383,900
• 24% – Single income exceeding $100,525 and married couples filing jointly with income above $201,050
• 22% – Single income exceeding $47,150 and married couples filing jointly with income above $94,300
• 12% – Single income exceeding $11,600 and married couples filing jointly with income above $23,200
• 10% – Single income of $11,600 or less and married couples filing jointly with income under $23,200

Tax exemptions and credits

One notable update from the IRS concerns the alternative minimum tax exemption (AMT). Certain tax benefits can significantly reduce a taxpayer’s usual tax amount. The AMT targets high-income taxpayers, limiting these advantages to ensure they pay at least a basic minimum tax, as stated by the IRS on their website.

The AMT exemption for the tax year 2024 has increased to $85,700 and begins to phase out at $609,350, marking an increase of $4,400 and $31,200 respectively compared to 2023. For married couples filing jointly, the exemption amount has gone up to $133,300, phasing out at $1,218,700, which is an increase of $6,800 and $62,400 from the previous year, as reported by the IRS.

The maximum Earned Income Tax Credit for the tax year 2024 is $7,830 for taxpayers with three or more qualifying children, an increase of $400 from the tax year 2023.

According to an IRS spokesperson, based on public statistics, fewer than 180,000 out of 153.8 million tax returns filed in 2023 were subject to the alternative minimum tax. The actual number may be higher, considering that the figures were compiled only through November.

Changes to health savings account contributions

The allowance for employee health savings account contributions is set to rise to $3,200 for the tax year 2024, as announced by the IRS in November of the previous year.

For those with self-only coverage in a medical savings account, the maximum out-of-pocket expense limit for 2024 will be $5,550, an increase of $250 from 2023.

Furthermore, family coverage will have an out-of-pocket expense limit of $10,200 for the 2024 tax year, which is $550 more than in 2023.

Will tax brackets change for tax year 2025?

In October, the IRS provided insights on possible changes for taxpayers for tax year 2025, which will affect those filing their taxes starting January 2026.

Taxpayers can expect another increase in standard deductions: it will rise to $15,000 for individual taxpayers and those married filing separately, which is a $400 increase from the current year, as stated by the IRS.

For married couples filing jointly, the standard deduction will be $30,000, an increase of $800, while heads of households will see their standard deduction increase to $22,500, which is $600 more than this year.

The IRS outlines the following tax brackets for singles and married couples filing jointly:

• 37% − Single income exceeding $626,350 and married couples filing jointly with income above $751,600
• 35% – Single income exceeding $250,525 and married couples filing jointly with income above $501,050
• 32% – Single income exceeding $197,300 and married couples filing jointly with income above $394,600
• 24% – Single income exceeding $103,350 and married couples filing jointly with income above $206,700
• 22% – Single income exceeding $48,475 and married couples filing jointly with income above $96,950
• 12% – Single income exceeding $11,925 and married couples filing jointly with income above $23,850
• 10% – Single income of $11,925 or less and married couples filing jointly with income less than $23,850

According to the IRS, the new maximum Earned Income Tax Credit for qualifying taxpayers with three or more eligible children will also be updated.

The highest amount for the Earned Income Tax Credit will reach $8,046, which is an increase of $216 compared to the tax year 2024.