IRS unveils new tax brackets and deductions for 2025

Without action from Congress, tax cuts enacted under former President Donald Trump are set to expire after 2025

The IRS has unveiled new federal income tax brackets and standard deductions for the 2025 tax year, effective for returns filed in 2026, as reported by CNBC. In its announcement on Tuesday, the agency raised income thresholds across all tax brackets. 

For 2025, the top marginal rate of 37% will apply to individuals with taxable income exceeding $626,350, while married couples filing jointly will face the same rate if their earnings surpass $751,600.

In addition to adjusting the tax brackets, the IRS has increased values for several other provisions, including long-term capital gains brackets, estate and gift tax exemptions, and eligibility for the child tax credit.

Federal income tax brackets determine how much taxpayers owe on their taxable income, calculated by deducting either the standard or itemized deductions from their adjusted gross income. 

The updated standard deduction for married couples filing jointly will rise to $30,000 in 2025, up from $29,200 in 2024. Single filers can claim $15,000, an increase from $14,600.

Without action from Congress, the tax cuts enacted under former President Donald Trump are set to expire after 2025. If they sunset, tax brackets will revert to pre-2017 levels, with rates of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. 

Trump's tax cuts also introduced higher standard deductions, which are also scheduled to end after 2025 unless Congress intervenes to extend them.