The IRS on Tuesday announced its new inflation-adjusted tax brackets for 2025, with the annual income thresholds rising by about 2.8% from 2024 — the smallest jump in several years.
The idea is to protect taxpayers from “bracket creep” — when workers are pushed into higher tax bands due to the impact of cost-of-living adjustments aimed at offsetting inflation — without a change in their standard of living.
But with U.S. inflation cooling to its lowest level in three years, the IRS’ annual adjustments are likewise become smaller.
For instance, the new threshold for the 10% tax bracket for married couples filing jointly will rise to $23,850 in 2025, a 2.8% increase from its 2024 threshold of $23,200
The standard deduction in 2025 will rise to $30,000 for married couples filing jointly, a roughly 2.7% increase from the current tax year’s $29,200.
—This is a breaking story and will be updated.
