🧾 2025 Federal Tax Numbers
The IRS has finalized a number of inflation-adjusted figures that will affect your tax return, retirement planning, and tax-smart decisions. Here’s a breakdown of the key numbers you should know.
đź“Š Federal Income Tax Brackets (2025)
For the 2025 tax year, the U.S. federal income tax system continues with seven tax brackets ranging from 10% to 37%. These brackets are indexed for inflation each year, helping prevent “bracket creep.”
đź’ˇ How Tax Brackets Work
Rather than tipping your entire income into a higher rate, only the income within each bracket gets taxed at that rate.
Example:
If you’re single with $60,000 in taxable income:
The first $11,925 is taxed at 10% - $1,192.50
The next slice up to $48,475 is taxed at 12% - $4,386.00
Only the amount over $48,475 up to $60,000 gets taxed at 22% - $2,535.28
TOTAL TAX - $8,113.78
Tax Bracket is 22% but EFFECTIVE TAX RATE is tax/taxable income = 13.5%
This “layered” structure helps keep your average tax rate (a.k.a. effective rate) lower than your marginal rate.
Additional Deductions for Seniors and the Blind:
Taxpayers aged 65+ or blind can each claim an additional $2,000 on top of the standard deduction. Under the 2025 tax law (the One Big Beautiful Bill Act), individuals 65+ can each take an additional $6,000 bonus deduction whether they itemize or use the standard deduction (subject to income phaseouts).
đź’Ľ Retirement Account Contribution Limits (2025)
Maximizing retirement contributions remains a great way to reduce taxable income and save for the future. Here’s what’s changed for the 2025 tax year:
IRA Contributions
$7,000 total IRA contribution limit for individuals under age 50.
$8,000 limit if age 50 or older (includes $1,000 catch-up).
This limit applies across all IRAs combined (traditional + Roth).
401(k), 403(b), 457 Plans
$23,500 elective deferral limit for 401(k) employee contributions in 2025.
Make additional catch-up contributions if you are 50 or older:
$7,500 extra standard “catch-up”
Up to $11,250 for ages 60–63 under SECURE 2.0 provisions (if your plan allows).
$70,000 combined employer + employee contribution limit (plus catch-ups where applicable).
These contributions include both traditional (pre-tax) and Roth options.
đź“Ś Other Useful Limits & Info
SALT Deduction Cap: If you itemize, the limit on state and local tax deductions increased to $40,000 for individuals ($20,000 if married filing separately) for 2025.
Saver’s Credit: Income thresholds for the Retirement Savings Contributions Credit (Saver’s Credit) have increased modestly.
