The annual inflation adjustments for fiscal year 2025 were released by the Internal Revenue Service (IRS). Details on modifications and adjustments to over 60 tax rules that will impact taxpayers when they file their returns in 2026 are available in the Revenue Procedure 2024-40 PDF.
What changes will be made to the tax returns for 2025?
Income tax returns submitted starting in the 2026 tax season are typically subject to the fiscal year 2025 changes detailed below.
The following monetary sums are among the tax items for fiscal year 2025 that many taxpayers are most interested in:
Standard deductions: The standard deduction for 2025 is $15,000, which is $400 more than it was in 2024 for married individuals and single taxpayers filing separately.
The standard deduction is now $30,000 for married couples filing a joint return, which is $800 more than it was in 2024.
A Different Minimum Tax
The exemption amount for single people rises to $88,100 for the 2025 tax year ($68,650 for married people filing a separate return), and it starts to phase out at $626,350.
The exemption level rises to $137,000 and starts to phase out at $1,252,700 for married couples filing a joint return.
credits for earned income taxes. The maximum Earned Income Tax Credit amount for fiscal year 2025 is $8,046, up from $7,830 for fiscal year 2024, for eligible taxpayers with three or more qualifying children.
A table that lists the phase-in income criteria and the maximum EITC for other categories is part of the income procedure.
Fringe benefit for qualified transportation: The qualified parking monthly limitation and the qualified transportation fringe benefit monthly limitation have been raised from $315 in fiscal year 2024 to $325 in fiscal year 2025.
Health cafeteria plans with flexible spending arrangements. The cash cap on employee salary reductions for contributions to health flexible spending plans goes up from $3,200 in 2024 to $3,300 for taxable years starting in 2025.
Accounts for medical savings: Participants with individual plan coverage are required to have an annual deductible for fiscal year 2025 that is at least $2,850 (up $50 from the previous fiscal year) but not more than $4,300 (up $150 from the previous fiscal year)
In fiscal 2024, the maximum out-of-pocket payment was $5,550; now, it is $5,700.
The yearly deductible for family coverage in fiscal year 2025 is at least $5,700, which is an increase from $5,550 in fiscal year 2024. However, the deductible can’t exceed $8,550, which is $200 higher than the 2024 limit.
In fiscal year 2025, the out-of-pocket limit for family coverage is $10,500, while in fiscal year 2024, it was $10,200.
Excluding revenue generated abroad: The foreign earned income exclusion rises from $126,500 in fiscal year 2024 to $130,000 in fiscal year 2025.
2025 Tax Filing: How to Use IRS Free File to Access Your Eligible Tax Credits
Credit for estate taxes: The basic exclusion amount for the estates of deceased people who passed away in 2025 is $13,990,000, which is higher than the $13,610,000 sum for those who passed away in 2024.
For calendar year 2025, the annual gift exclusion rises from $18,000 for 2024 to $19,000.
Credits for adoption: Increased from $16,810 for fiscal year 2024 to $17,280 for fiscal year 2025, the maximum credit permitted for adopting a child with exceptional needs is the sum of eligible adoption expenses.
