Revenue Procedure 2024-40
Official IRS Inflation Adjustments for Tax Year 2025
Income earned in 2025, filed in early 2026 • Published October 2024
📋 Quick Summary
Revenue Procedure 2024-40 announces the annual inflation adjustments for Tax Year 2025. The IRS uses the Chained Consumer Price Index (C-CPI-U) to adjust tax parameters, preventing "bracket creep" where inflation pushes taxpayers into higher brackets.
Key Highlights for 2025:
- • Standard deductions increased by ~2.8% from 2024
- • Tax bracket thresholds adjusted upward for inflation
- • 50+ provisions updated including credits, exemptions, and phase-outs
- • Most significant increases: retirement contributions and estate tax exemption
💰 Standard Deduction Amounts
| Filing Status | 2024 Amount | 2025 Amount | Change |
|---|---|---|---|
| Single | $14,600 | $15,750 | +$1,150 |
| Married Filing Jointly | $29,200 | $31,500 | +$2,300 |
| Married Filing Separately | $14,600 | $15,750 | +$1,150 |
| Head of Household | $21,900 | $23,625 | +$1,725 |
📌 Additional Standard Deduction (Age 65+ or Blind):
• Single or Head of Household: +$2,050 per qualifying condition
• Married Filing Jointly/Separately: +$1,600 per spouse per qualifying condition
If you're 65+ AND blind, you get both additional amounts added to your standard deduction.
📊 2025 Federal Tax Brackets
Single Filers
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 to $11,600 |
| 12% | $11,600 to $47,150 |
| 22% | $47,150 to $100,525 |
| 24% | $100,525 to $191,950 |
| 32% | $191,950 to $243,725 |
| 35% | $243,725 to $609,350 |
| 37% | $609,350 and above |
Married Filing Jointly
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 to $23,200 |
| 12% | $23,200 to $94,300 |
| 22% | $94,300 to $201,050 |
| 24% | $201,050 to $383,900 |
| 32% | $383,900 to $487,450 |
| 35% | $487,450 to $731,200 |
| 37% | $731,200 and above |
Head of Household
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 to $16,550 |
| 12% | $16,550 to $63,100 |
| 22% | $63,100 to $100,500 |
| 24% | $100,500 to $191,950 |
| 32% | $191,950 to $243,700 |
| 35% | $243,700 to $609,350 |
| 37% | $609,350 and above |
🎁 Tax Credits & Benefits
Child Tax Credit
$2,200
Per qualifying child under 17
Income Phase-out begins at:
• Single: $200,000
• MFJ: $400,000
Reduces by $50 per $1,000 over threshold
Earned Income Tax Credit (EITC)
Maximum Credit Amounts:
• No children: $649
• 1 child: $4,213
• 2 children: $6,960
• 3+ children: $7,830
Income limits vary by filing status and number of children
Other Credits
Adoption Credit: $17,280
Lifetime Learning Credit: 20% of up to $10,000
American Opportunity Credit: Up to $2,500 per student
Saver's Credit: 10%-50% of contributions
Foreign Earned Income Exclusion
$130,000
Maximum exclusion for 2025
Up from $126,500 in 2024
💼 Retirement & Savings Limits
401(k) Plans
• Employee deferral: $23,500
• Age 50+ catch-up: $7,500
• Total limit (incl employer): $70,000
Traditional & Roth IRA
• Contribution limit: $7,000
• Age 50+ catch-up: $1,000
• Total age 50+: $8,000
Health Savings Account (HSA)
• Individual: $4,300
• Family: $8,550
• Age 55+ catch-up: $1,000
SIMPLE IRA
• Employee deferral: $16,500
• Age 50+ catch-up: $3,500
🏢 Business & Self-Employment
Social Security Wage Base
$176,100
Maximum wages subject to Social Security tax (12.4% total: 6.2% employee + 6.2% employer)
Up from $168,600 in 2024 (+$7,500)
Section 179 Expensing
$1,250,000 max deduction
Phase-out begins at $3,130,000 in purchases
QBI Deduction Threshold
Single: $197,300
MFJ: $394,600
20% deduction begins to phase out above these amounts
Self-Employment Tax
15.3% total rate on net earnings up to Social Security wage base
12.4% Social Security + 2.9% Medicare
Additional Medicare Tax
0.9% on wages/SE income over:
Single: $200,000 • MFJ: $250,000 • MFS: $125,000
🎁 Estate & Gift Tax
Estate Tax Exemption
$13,990,000
Per individual (doubles for married couples)
Up from $13,610,000 in 2024
Annual Gift Tax Exclusion
$19,000
Per recipient, per year (no gift tax filing required)
Up from $18,000 in 2024
📋 Other Important Adjustments
Alternative Minimum Tax (AMT)
Exemption: $88,100 (single)
$137,000 (MFJ)
Transportation Benefits
Commuter/Parking: $325/month
Adoption Assistance
Exclusion: $17,280
Medical Savings Account
Individual: $2,850
Family: $5,700
Long-Term Care Premium
Age 70+: $6,020 max deduction
Kiddie Tax Threshold
Unearned income: $2,700
📄 Official IRS Publication
Revenue Procedure 2024-40 was published by the IRS on October 22, 2024 in the Internal Revenue Bulletin.
📥 Download Official IRS Rev. Proc. 2024-40 (PDF)Source: IRS Internal Revenue Bulletin 2024-43, October 21, 2024
🔧 Use Our 2025 Tax Calculators
💰 Refund Estimator
Calculate your 2025 tax refund using these updated brackets
📋 Do I Need to File?
Check if you're required to file using 2025 thresholds
🧮 Standard vs Itemized
Compare using the new $15,750/$31,500 standard deductions
📅 Quarterly Tax Calculator
Estimate quarterly payments with 2025 tax rates