For the 2025 tax year, the standard deduction (often referred to as the basic exemption) has increased to $15,750 for single filers and $31,500 for married couples filing jointly. The amount for heads of households is $23,625. These increased amounts are due to tax law changes (OBBBA).
OBBBA increases and makes permanent the nearly doubled standard deduction that began as part of 2017's TCJA, which was supposed to expire in 2025. The lowest bracket remains at 10%, and the highest is 37%. The standard deduction in 2025 is $15,750 for a single filer and $31,500 for those married filing jointly.
Higher basic exemption limit – Currently set at Rs. 3 lakh, the basic exemption limit will be increased to Rs. 4 lakh from April 1, 2025 (FY 2025-26), providing additional tax relief to all individual taxpayers.
For the 2025 tax year, the standard deduction is $15,750 for Single filers, $31,500 for Married Filing Jointly, and $23,625 for Head of Household, with additional amounts for those 65 or older or blind, thanks to inflation adjustments and a legislative boost from the "One Big Beautiful Bill" (OBBB).
The Income Tax (Exemption) Order 2025 (“2025 Order”) was gazetted on 13 February 2025 and provides exemption from income tax on various payments from specified Labuan persons. The 2025 Order replaces the existing Income Tax (Exemption) (No. 22) Order 2007 (“2007 Order”) with effect from the year of assessment 2023.
For the 2025 tax year, the basic federal standard deduction (the "basic exemption") increased significantly due to inflation and a special boost from the new One, Big, Beautiful Bill (OBBB), now being $15,750 for Single filers, $31,500 for Married Filing Jointly, and $23,625 for Head of Household, with further additional amounts for seniors and the blind. These figures reflect an approximate 7.9% increase from 2024, with the OBBB law extending the doubled standard deduction.
The annual exclusion amount for 2025 and 2026 is $19,000. The individual and his or her spouse wish to split all gifts made by each other during the calendar year.
75,000 only for tax payers opting for new tax regime. This increase is applicable from FY 2024-25. Union budget 2024 has proposed an increase in the standard deduction under the new tax regime for the FY 2025-26 to Rs. 75,000.
For tax year 2025, seniors (65+) get a new $6,000 "bonus" federal tax deduction (or $12,000 for couples) under recent legislation, in addition to existing age-based deductions, phasing out at higher incomes (MAGI $75k single, $150k joint) and requiring filing jointly if married to claim the full amount, while some states also offer senior property tax exemptions, like Colorado's temporary reinstatement for recent movers, requiring separate applications.
How to Save Tax in India? 10 Smart and Legal Ways for FY 2025-26
To avoid the 22% tax bracket (or any higher bracket), focus on reducing your taxable income through strategies like maxing out 401(k)s and HSAs, deferring bonuses, tax-loss harvesting, smart charitable giving, and strategic asset location, understanding that higher rates only apply to income within that bracket, not your entire income.
For the 2025 tax year (filed in 2026), seniors over 65 get an extra standard deduction of $2,000 (single/HOH) or $1,600 per person (married) on top of the base standard deduction, plus a new $6,000 "One Big Beautiful Bill" (OBBB) deduction (phased out above $75k/$150k income). This means single filers can get $2,000 (regular) + $6,000 (OBBB) = $8,000 extra, while married couples get $1,600 per person (regular) + $6,000 per person (OBBB) = $7,200 per person (or $14,400 total) before income limits.
The new deduction for seniors over 65 will start to phase out for those with higher incomes. The 2025 senior deduction starts to decrease for taxpayers with a Modified Adjusted Gross Income (MAGI) over $75,000 (Single)/$150,000 (Married Filing Jointly).
Personal Exemptions.
For tax year 2026, personal exemptions remain at 0, as in tax year 2025. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017 and was made permanent by OBBB.
The income tax slab rates under the new tax regime for FY 2025–26 are as follows: income up to ₹4 lakh is tax-free; ₹4 lakh to ₹8 lakh is taxed at 5%; ₹8 lakh to ₹12 lakh at 10%; ₹12 lakh to ₹16 lakh at 15%; ₹16 lakh to ₹20 lakh at 20%; ₹20 lakh to ₹24 lakh at 25%; and income above ₹24 lakh is taxed at 30%.
Yes, federal taxes are changing significantly in 2025 due to the One Big Beautiful Bill Act, making the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent, increasing the standard deduction, boosting the Child Tax Credit to $2,200, raising the SALT deduction cap, and introducing new credits, while also expiring some energy credits. These changes mean higher standard deductions, more generous credits for families and seniors, and a higher cap on state and local tax deductions for many, impacting most taxpayers.
There's no limit on how much money you can give or receive as a gift! However, there are some occasions where tax may be payable, or capital gains tax (CGT) may apply. For example, in some instances when gifting property, shares or crypto assets, or when receiving money or an asset from a non-resident trust.
In 2025, the maximum BPA was set at $16,129 for taxpayers earning $177,882 or less. For incomes above this threshold, the amount gradually decreases, reaching a minimum of $14,538 for those earning $253,414 or more. It's worth checking each year if the amount has changed due to inflation or government policy.
Calculate Basic Salary from Gross Salary
The standard deduction is a specific dollar amount that reduces the amount of taxable income. The standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and/or blindness.