2025: New Year, New Limits

Updated July 2025 to reflect changes in the standard deduction and the bonus deduction for those over age 65 (due to legislation).

As we are about to turn the page (click the arrow?) on the calendar to move into 2025, there are many changes that happen around taxes. These include tax bracket changes, changes in the limits of what you can contribute to various retirement accounts, and a variety of other changes. The following is by no means an exhaustive list, but I’ve tried to include the changes that I think are most likely to be useful for planning purposes to the readers of this blog. As always, I’m not a CPA, so check with a tax professional if you have any questions.

2025 Federal Income Tax Brackets

2025 Federal Capital Gains Tax Brackets

2025 Federal Standard Deduction

2025 Roth IRA Income and Contribution Limits

2025 Traditional IRA Income Limits for Deduction

2025 Defined Contribution Limits (401k/403b/457)

2025 Health Savings Accounts (HSA)

2025 Health Flexible Spending Account (Health FSA & Limited Purpose FSA)

Dependent Care Flexible Spending Account

2025 Transportation Benefit Exclusion

2025 Medicare Premiums

2025 Education Tax Credits

2025 Savers Credit

Note: Maximum contribution amount to calculate credit on is $2,000 (single) or $4,000 (married filing jointly), so the maximum credit is $1,000 (single) or $2,000 (married filing jointly.)

Age for Required Minimum Distribution (RMD)

ACA Health Insurance Premium Subsidy

As part of the Inflation Reduction Act, the enhanced premium subsidy for health insurance through the ACA Marketplace was extended through 2025. Prior to the American Rescue Plan and now this extension, subsidies were limited to those with incomes up to 400% of the Federal Poverty Level. Currently, that income limit is waived and your premiums are limited to 8.5% of your Modified Adjusted Gross Income (MAGI) no matter your income. (See this blog post.)

Are There Changes You Can (Should) Make?

So now is a great time to evaluate all of the above areas that might apply to you and perhaps make some changes. It’s always a good idea to see if you can increase your contributions to retirement plans, your HSA, or your FSA, and as you start gathering all the info you need to complete your 2024 taxes, start thinking about ways you might be able to optimize your 2025 taxes.