Rise in standard deductions
For heads of households, it is $22,500 for tax year 2025, up $600 from tax year 2024. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction increases to $15,000 for 2025, up $400 from 2024.
In 2026, personal exemptions would return and be valued at $5,300. The standard deduction would shrink, and be valued at $8,350 for single filers, $16,700 for joint filers, and $12,250 for head of household filers, compared to $15,450, $30,850, and $23,150, respectively, if the TCJA instead continued.
Tax year 2025
The maximum amount of credit: No qualifying children: $649. 1 qualifying child: $4,328. 2 qualifying children: $7,152.
Starting in 2025, tax Social Security benefits in a manner similar to private pension income.
For 2025, the annual gift tax exclusion is $19,000, up from $18,000 in 2024. This means a person can give up to $19,000 to as many people as he or she wants without having to pay any taxes on the gifts. For example, a man could give $19,000 to each of his grandchildren in 2025 with no gift tax implications.
As a cost offset for doubling the standard deduction, personal exemptions were eliminated with TCJA and are slated to return in 2026. The current estimate for 2026 is a $5,300 deduction per individual, spouse, and dependent.
For 2024, the additional standard deduction amounts for taxpayers who are 65 and older or blind are: $1,950 for Single or Head of Household (increase of $100) $1,550 for married taxpayers or Qualifying Surviving Spouse (increase of $50)
Individual tax rates
When the TCJA expires at the end of 2025, marginal tax rates for individuals will revert to pre-TCJA levels, including a maximum rate of 39.6% from 37%. Generally, Democrats are hoping to raise the top rate back up, whereas Republicans support lowering marginal rates.
Will 2025 bring you a bigger tax refund? All things being equal, it might. Your tax refund may be bigger this year due to inflation-related changes to the standard deductions and tax brackets for 2024.
You report the taxable portion of your Social Security benefits on line 6b of Form 1040 or Form 1040-SR. Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.
Highlights of changes for 2025. The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan is increased to $23,500, up from $23,000. The limit on annual contributions to an IRA remains $7,000.
Taxpayers 65 and older qualify for an additional standard deduction, reducing their taxable income. The extra deduction amount differs based on filing status and whether the taxpayer or spouse is blind.
Long-term capital gains tax rates for the 2025 tax year
For the 2025 tax year, individual filers won't pay any capital gains tax if their total taxable income is $48,350 or less. The rate jumps to 15 percent on capital gains, if their income is $48,351 to $533,400. Above that income level the rate climbs to 20 percent.
Wealthy family buys stocks, bonds, real estate, art, or other high-value assets. It strategically holds on to these assets and allows them to grow in value. The family won't owe income tax on the growth in the assets' value unless it sells them and makes a profit.
The standard deduction for 2025 is $15,000 for single filers and married people filing separately, $22,500 for heads of household, and $30,000 for those married filing jointly and surviving spouses.
Taxes aren't determined by age, so you will never age out of paying taxes. People who are 65 or older at the end of 2024 have to file a return for tax year 2024 (which is due in 2025) if their gross income is $16,550 or higher. If you're married filing jointly and both 65 or older, that amount is $32,300.
In 2024 and 2025, the federal income tax rates for each of the seven brackets are the same: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. But the income ranges for each of those brackets changes every year, based on IRS inflation adjustments.
Beginning in 2026, the basic standard deduction would be roughly half of what it is now, adjusted for inflation. While this may result in many taxpayers once again itemizing their deductions, some taxpayers may find that their itemized deductions will be less than the higher standard deduction under the TCJA.
The 2024 standard deduction for head of household is $21,900. People who are 65 or older can take an additional standard deduction of $1,950 for single and head of household filers and $1,550 for married filing jointly, married filing separately, and qualifying spouse filers.
If the entity is a company or trust then to access the 15-year exemption the entity must have a significant individual for a total of at least 15 years during which the entity owned the asset (and the individual who was the significant individual just before the CGT event retires or is permanently incapacitated).
Bottom Line. California doesn't enforce a gift tax, but you may owe a federal one. However, you can give up to $19,000 in cash or property during the 2025 tax year and up to $18,000 in the 2024 tax year without triggering a gift tax return.
January 2025 COLA Increase
The COLA effective January 1, 2025 is 2.5%. The maximum SSI for a single person is increased from $943 to $967. The maximum SSI for a couple is increased from $1,415 to $1,450.
Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits. More than $34,000, up to 85% of your benefits may be taxable.