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Key takeaways
The seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent, with income thresholds adjusted for inflation.
The standard deduction increased for 2025 and 2026, and a new temporary “bonus” deduction for adults 65 and older begins in 2025.
The child tax credit increased to $2,200 for the 2025 and 2026 tax years; retirement plan contribution limits for IRAs and 401(k)s also increased for 2026.
Each year, the IRS adjusts more than 60 tax provisions to keep income tax brackets, deductions and other inputs in line with the cost of living. For the 2025 tax year (filing returns in 2026) these adjustments, including federal income tax brackets, increased on average by about 2.8%.
The July 2025 passage of the One Big Beautiful Bill Act established many new tax laws that became effective immediately and made permanent many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire at the end of 2025.
Review the following changes to tax brackets, deductions and retirement contributions to guide your tax planning.
2025 tax law changes to tax brackets, deductions, and credits
Here’s a summary of key changes for the 2025 tax year.
- The seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent.
- Standard deductions increased, plus a new “bonus” deduction for older adults.
- Child tax credit increased to $2,200 per qualifying child.
- SALT deduction cap increased temporarily, with income-based phaseouts.
2025 tax brackets
For the 2025 tax year, the seven federal tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
A key income threshold to watch for high-income filers is $197,300 for single filers and $394,600 for married couples filing jointly. Those are the respective thresholds for moving up from the 24% tax rate bracket to the higher 32% rate bracket. The top marginal income rate of 37% will apply to single filers with taxable income of $626,350 and, for married couples filing jointly, taxable income above $751,600.
2025 Tax Rate
Single Filers
Married Filing Joint Return
Head of Household
10%
$0 to $11,925
$0 to $23,850
$0 to $17,000
12%
$11,925 to $48,475
$23,850 to $96,950
$17,00 to $64,850
22%
$48,475 to $103,350
$96,950 to $206,700
$64,850 to $103,350
24%
$103,350 to $197,300
$206,700 to $394,600
$103,350 to $197,300
32%
$197,300 to $250,525
$394,600 to $501,050
$197,300 to $250,500
35%
$250,525 to $626,350
$501,050 to $751,600
$250,500 to $626,350
37%
$626,350 or more
$751,600 or more
$626,350 or more
Source: Internal Revenue Service.
Filing Status
2025 Standard Deduction Amount
2026 Standard Deduction Amount
Single
$15,750
$16,100
Married Filing Jointly
$31,500
$32,200
Head of Household
$23,625
$24,150
In addition, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,350 or the sum of $450 and the individual’s earned income.
From 2025 to 2028, adults age 65+ can claim a temporary bonus deduction of $6,000 if single or $12,000 if married filing jointly.
For the 2025 tax year, the total standard plus bonus deduction for those age 65 and older is $21,750 for a single person and $43,500 for a married couple filing a joint return. However, income thresholds apply. Only single filers with modified adjusted gross income (MAGI) of $75,000 or below, or married couples with MAGI of $150,000 or below, can claim the full deduction. It gradually phases out for those with incomes above those thresholds.
Filing Status
Modified Adjusted Gross Income (MAGI) Phaseout Threshold
2025 Bonus Deduction for 65+ Aged Individuals
Single
<$75,000
$6,000
$75,000-$175,000
Reduced by 6% for every dollar over threshold
>$175,000
$0
Married Filing Jointly (both must be 65+)
<$150,000
$12,000
$150,000-$250,000
Reduced by 6% for every dollar over threshold
>$250,000
$0
2025 capital gains tax brackets
Long-term capital gains face different brackets and rates than ordinary income.
It's possible for people with lower income to pay no long-term capital gains tax when selling appreciated assets that they have held for more than a year (long-term capital gain). For example, the 0% long-term capital gains tax applies to married couples filing a joint return with incomes of $96,700 or below.
Applicable Long-Term Capital Gains Tax Rate
Single Filers with Taxable Income Over
Married Couples Filing Jointly with Taxable Income Over
Heads of Households with Taxable Income Over
0%
$0
$0
$0
15%
$48,350
$96,700
$64,750
20%
$533,400
$600,050
$566,700
Net Investment Income Tax 2025
The Net Investment Income Tax (NIIT) applies to certain investment income for individuals, estates, and trusts with income above a set threshold.
Net investment income generally includes interest, dividends, capital gains, and other categories defined by the Internal Revenue Service (IRS).
NIIT is calculated at 3.8% of the lesser of your net investment income or the amount your modified adjusted gross income (MAGI) exceeds the threshold. If your MAGI is below the threshold—even if you have investment income—you won’t owe NIIT. The thresholds don’t adjust for inflation.
Filing Status
Net Investment Income Tax (NIIT) Threshold
Single
$200,000
Married Filing Jointly
$250,000
Alternative minimum tax 2025 & 2026
The alternative minimum tax (AMT) was created in 1969 to close tax loopholes for those in higher tax brackets. The new tax law adjusted the alternative minimum tax in a few ways, including a reduction in income levels for exemption phaseout. These amounts will be adjusted for inflation in subsequent years.
For the 2025 tax year, the AMT exemption phaseout is 25 cents for every dollar above the AMT income (AMTI) threshold. Beginning with the 2026 tax year, the phase out rate increases to 50% while the phaseout threshold amount decreases.
Filing Status
2025 AMT Exemption Amount | Phaseout Threshold
2026 AMT Exemption Amount | Phaseout Threshold
Single
$88,100 | $626,350
$90,100 | $500,000
Married Filing Jointly
$137,000 | $1,252,700
$140,200 | $1,000,000
Child tax credit 2025 & 2026
The maximum child tax credit for 2025 and 2026 is raised $2,200 per qualifying child; this amount may be adjusted yearly for inflation. Qualified taxpayers may receive a refund of up to $1,700 in 2025 and 2026 as part of the additional child tax credit (this amount will also adjust annually for inflation).
However, eligibility rules and income thresholds apply. To qualify for the tax credit, a child:
- Must be under age 17 at the end of the tax year
- Be listed as a dependent on your tax return
- Live with you for more than half the year
- Meet citizenship requirements, and have at least one parent or guardian also meet citizenship requirements
Additionally, the child tax credit is only available for taxpayers with MAGI up to a certain threshold, after which it’s phased out.
Filing Status
MAGI Phaseout Threshold
Child Tax Credit 2025 & 2026
Single
<$200,000
$2,200 per child
$200,000-$240,000
Reduced by $50 for each $1,000 of income over threshold
>$240,000
$0
Married Filing Jointly
<$400,000
$2,200 per child
$400,000-$440,000
Reduced by $50 for each $1,000 of income over threshold
>$440,000
$0
2025 SALT deduction limits
The SALT (state and local taxes) deduction limit is temporarily increased to $40,000 for married couples filing jointly for the 2025 tax year.
This deduction amount only applies to those with MAGI up to a certain threshold. Above that threshold, the deduction amount is reduced by 30% for every dollar over the threshold, and eventually, the cap reverts to $10,000 for married couples filing jointly.
The limit is based on your tax filing status and only applicable if you itemize your deductions.
Filing Status
2025 SALT Deduction Limit
2025 MAGI Phaseout Threshold
2026 SALT Deduction Limit
2026 MAGI Phaseout Threshold
Married Filing Jointly
$40,000
$500,000
$40,400
$505,000
Married Filing Separately
$20,000
$250,000
$20,200
$252,500
The new income limit and phase out thresholds increase by 1% every year through tax year 2029. After that, the SALT deduction is permanently reduced to $10,000 ($5,000 for married couples filing separately).
2026 gift tax exclusion and lifetime estate tax exemption amounts
The 2026 gift tax exclusion allows the first $19,000 of monetary gifts to any person to be excluded from tax. The exclusion is $190,400 for gifts to spouses who are not citizens of the U.S., up from $190,000 in 2025.
For 2026, the federal estate tax exemption is $15 million per individual and $30 million for married couples filing jointly. Going forward, this amount may be adjusted annually to reflect inflation.
Retirement plan contribution adjustments for 2026
The IRS increased retirement account contribution limits for 2026.
- The limit on annual contributions to a traditional or Roth IRA for the 2026 tax year increases to $7,500, up from $7,000 for the 2025 tax year. The traditional and Roth IRA catch‑up contribution limit for individuals aged 50 and over increases to $1,100 for the 2026 tax year, up from $1,000 for the 2025 tax year.
- Contribution limits for a simplified employee pension (SEP) IRA in 2026 are $72,000 or 25% of the employee's compensation, whichever is lower. This increases from $70,000 in 2025. The maximum compensation that can be considered for SEP IRA contributions also increases to $360,000 in 2026, up from $350,000 in 2025.
- Individuals with a SIMPLE IRA can contribute up to $17,000 in 2026, up from $16,500 in 2025. Individuals aged 50 and older can contribute an additional $4,000 in catch-up contributions. (See exception for employees ages 60-63 below.)
- The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan increases to $24,500 in 2026, up from $23,500 in 2025.
- The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan increases to $8,000 for 2026. Participants 50 and older generally can contribute up to $32,500 in 2026. (See exception for employees ages 60-63 below.)
- Due to a provision of the Secure 2.0 Act, a higher catch-up contribution limit applies for employees ages 60, 61, 62 and 63 who participate in these plans. For 2026, this higher catch-up contribution limit remains $11,250. A higher catch-up contribution limit of $5,250 also applies for individuals ages 60-63 who contribute to a SIMPLE IRA.
- The MAGI ranges for determining eligibility for Roth IRAs also increase in 2026. Get more details about Roth IRA income limits.
2025 Contribution Limits
2026 Contribution Limits
401(k) Standard Contribution
$23,500
$24,500
401(k) Catch Up Contribution
$7,500
$8,000
401(k) Catch Up Contribution Individuals Age 60-63 ONLY
$11,250
$11,250
Traditional and Roth IRA Standard Contribution
$7,000
$7,500
Traditional and Roth IRA Catch Up Contribution
$1,000
$1,100
SIMPLE IRA Standard Contribution
$16,500
$17,000
SIMPLE IRA Catch Up Contribution
$3,500
$4,000
SIMPLE IRA Catch Up Contribution Individuals Age 60-63 ONLY
$5,250
$5,250
Which tax provisions aren’t changing?
Certain items that were indexed for inflation in the past are currently not adjusted, despite other tax changes. Among those tax issues that remain unchanged:
- Personal exemptions. First eliminated in the TCJA, they are now permanently eliminated.
- Itemized deductions. For taxpayers in the top tax bracket (37%), itemized deductions are limited to 35 cents on the dollar. These limits are not applicable to taxpayers in all other tax brackets.
- Lifetime learning credits. The MAGI amount used by taxpayers to determine the reduction in the lifetime learning credit is not adjusted for inflation for tax years after Dec. 31, 2020. The lifetime learning credit is phased out for single tax filers with MAGI more than $80,000 ($160,000 for married couples filing jointly).
2026 Tax Rate
Single Filers
Married Filing Joint Return
Head of Household
10%
$0 to $12,400
$0 to $24,800
$0 to $17,700
12%
$12,401 to $50,400
$24,801 to $100,800
$17,701 to $67,450
22%
$50,401 to $105,700
$100,801 to $211,400
$67,451 to $105,700
24%
$105,701 to $201,775
$211,401 to $403,550
$105,701 to $201,775
32%
$201,776 to $256,225
$403,551 to $512,450
$201,776 to $256,200
35%
$256,226 to $640,600
$512,451 to $768,700
$256,201 to $640,600
37%
$640,601 or more
$768,701 or more
$640,601 or more
Take steps to optimize your taxes and finances
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