IRS Updates: Are you ready for tax year 2025?
Taxes can be confusing, but some changes in 2025 might actually help you save money. From bigger deductions to higher credits and new account limits, these updates could make a difference for your wallet. Check out the list below to see what’s new and how it could help you and your family.
1. Standard Deduction Goes Up
The amount you can subtract from your income before paying taxes is higher in 2025:
Single or Married Filing Separately: $15,000 (up from $14,600)
Married Filing Jointly: $30,000 (up from $29,200)
Head of Household: $22,500 (up from $21,900)¹
2. Tax Brackets Changed
The IRS updated the income ranges for each tax rate:
10%: Up to $11,925 ($23,850 for married couples)
12%: Over $11,925 ($23,850)
22%: Over $48,475 ($96,950)
24%: Over $103,350 ($206,700)
32%: Over $197,300 ($394,600)
35%: Over $250,525 ($501,050)
37%: Over $626,350 ($751,600)¹
3. Earned Income Tax Credit (EITC) Increased
If you have three or more qualifying children, the maximum EITC goes up to $8,046 (up from $7,830). This can help lower your taxes²
4. Flexible Spending Account (FSA) Limits
Health FSAs: You can contribute up to $3,300 (up from $3,200)³
Carryover Limit: You can roll over up to $660 to next year³
5. Medical Savings Account (MSA) Updates
Self-Only Coverage: Deductibles between $2,850 and $4,300
Family Coverage: Deductibles between $5,700 and $8,550
Out-of-Pocket Limits: $5,700 for self-only, $10,500 for family³
6. Foreign Earned Income Exclusion
If you work outside the U.S., you can exclude up to $130,000 of foreign income (up from $126,500)⁴
7. Estate and Gift Taxes
Estate Tax Exemption: $13,990,000 for people who die in 2025
Gift Tax Annual Exclusion: $19,000 per person (up from $18,000)⁵
8. Adoption Credit Increase
If you adopt a child with special needs, the maximum credit goes up to $17,280 (up from $16,810)⁶
9. No More Paper Refund Checks
Starting September 30, 2025, the IRS will start phasing out paper tax refund checks. Most taxpayers will get refunds electronically⁷
Taxes can feel complicated, but these 2025 updates could help you keep more of your money. Bigger deductions, higher credits, and new limits on accounts like Flexible Spending Accounts and Medical Savings Accounts may make a real difference. If you want help understanding how these changes affect you or your family, Sisters’ Community Bookkeeping is here to guide you every step of the way.
Footnotes / Sources
IRS Newsroom. IRS releases tax inflation adjustments for tax year 2025. https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
IRS. Earned Income Tax Credit (EITC). https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc
IRS. Healthcare FSA & MSA limits and contributions. https://www.irs.gov/publications/p969
IRS. Foreign earned income exclusion. https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
IRS. Estate and Gift Tax FAQs. https://www.irs.gov/newsroom/estate-and-gift-tax-faqs
IRS. Adoption Credit. https://www.irs.gov/credits-deductions/individuals/adoption-credit
IRS. One Big Beautiful Bill provisions – paper refund check phase-out. https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions