Hey, Iowa: Are You Aware of Changes to IRS Tax Brackets in 2025?

It's likely that with Thanksgiving less than a week away, and Christmas right around the corner, the last thing on your mind are income taxes. However, tax season is fast approaching, and the IRS has just announced some key new changes to taxes in 2025.

According to the website TodoDisca, there are several new changes coming to income taxes next year, most notably changes to tax brackets. Here's a breakdown of all that you should be aware of come tax time to make sure you're on the same page with the information the IRS is requesting.

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Changes to Tax Brackets:

In 2025, tax brackets will be adjusted in line with the inflation index. This move might benefit those who earn income in the lower range of each bracket. Some taxpayers might find that their income will be in a lower bracket than in previous years, which would result in lower tax payments.

TodoDisca elaborates by saying those in the middle income bracket might see a reduction in the applicable tax rate. This would benefit middle and lower income families and workers as a result.

Increase in the Standard Deduction:

The IRS has also announced that there will be an increase in the standard deduction. This increase will allow taxpayers to deduct more of their income before taxes come due. This increase is meant to offset the impact of inflation on taxpayers' purchasing power, which has hit all of us between the recent rise in gas and grocery prices:

For example, in 2025, single taxpayers, married filing jointly, and heads of household are expected to see an increase in their standard deductions, which will translate into a direct savings in the amount subject to tax. - per TodoDisca

Tax Credit Changes for Families:

The IRS will also be modifying the child tax credit as well as the earned income tax credit. These credits will expand eligibility for certain low-income taxpayers, and provide some relief for families with children.

Furthermore, these modifications will allow more people to access tax benefits than in previous years, helping reduce financial burden on those who could use every bit of it. TodoDisca notes that in times when the cost of living rises, parents receiving more help is critical for a number of reasons.

Retirement Contribution Adjustments:

Finally, the IRS has increased contribution limits for retirement accounts, such as 401(k)s and IRAs. This results in taxpayers being able to save more for retirement with tax benefits for doing so. For those paying taxes who are nearing the age of retirement, this means adding more to their accumulate retirement benefits.

You can read more about the IRS' changes to income tax brackets and other facets in 2025 on TodoDisca's website. Also consult the IRS' official website for specific forms and details.