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The IRS just announced big tax changes for 2025 — here’s what they are and how they could impact you

Updated: 04-11-2024, 04.36 PM

The IRS just dropped a raft of changes, big and small, to the U.S. tax code that could shift how much you owe — or save — in 2025. From bigger deductions to higher limits on health-related savings accounts, the changes reflect the government’s continued fight to curb inflation and resulting financial strain.

The adjustments, announced by the IRS in late October, are designed to bring some relief to taxpayers through increases in standard deductions, tax bracket thresholds, and other key areas. Some of the changes are related to adoption, commuting, and earning income from outside the country.

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In high-cost cities, the transportation benefit hike may bring some relief, while changes to medical savings options give families more flexibility to manage health-care costs. If you’re in a higher tax bracket or plan to leave an inheritance, it’s worth paying attention to the alternate minimum tax (AMT) and estate tax changes. The standard deduction increase and the earned income tax credit boost will directly benefit middle-income families, while commuters and people living or working abroad will also find things to like.

In all, the IRS announced more than 60 changes for the upcoming tax year. Below, we identify the nine of the biggest. How much they’ll impact you depends on your income, financial health, and tax strategy.

As with any tax updates, it’s smart to consult a tax professional on how to make these changes work for you. And it’s important to remember these changes take effect in the 2025 tax year — they won’t do you much good when it’s time to file your returns this coming spring.

Here’s one change nearly all American tax filers will get to enjoy: the standard deduction is going up. For the 90% or so who don’t choose to itemize their deductions each year, that means a little extra cash to help offset the persistent effects of inflation.

Single taxpayers can now deduct $15,000, a $400 increase from 2024. Married couples filing jointly get a bump to $30,000, while heads of households can claim $22,500. This increase could mean paying less in taxes, especially for those who don’t itemize.

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