Inflation has been a hot topic for politicians, CEOs and everyone who steps into a grocery store these days. It’s affected everything from halloween candy to holiday travel but a lesser discussed impact is on a wide variety of taxes. Each year, the IRS makes adjustments for different tax provisions based on inflation. They recently released their adjustments for the 2025 tax year, let’s take a look!

The question everyone wants to know: what’s the standard deduction? The standard deduction for married couples filing jointly has increased $800 from the previous year to $30,000. For taxpayers who are single or married but filing separately, the standard deduction increased $400 to $15,000. If you are the head of household, you can expect a $600 increase for a new deduction of $22,500.

The income tax brackets are also affected by inflation. Here is the new breakdown of tax brackets:

  • 37% for incomes over $626,350 ($751,600 for married couples filing jointly).
  • 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
  • 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
  • 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
  • 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
  • 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
  • 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

The maximum earned income tax credit for taxpayers with three or more children also increased by $216 to $8,046 from $7,830. For those traveling for work the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking have risen $10 to $325.

These adjustments affect many other tax considerations like the alternative minimum tax exemption, the maximum amounts you can contribute to your flexible health savings accounts, foreign earned income exclusion, estate taxes and even the credits for adopting children with special needs. It’s important to look over any adjustments and reconsider your tax planning accordingly. If you have any concerns or confusion over recent inflation adjustments and how that might affect your personal or business taxes, don’t hesitate to reach out to a team member at ClarkSilva today. We can walk you through what to expect and answer any questions you may have.