Planning your taxes for the upcoming years? Take a sneak peek at the latest standard deductions and tax brackets for the tax years 2024 and 2025.
Reminder:
Tax Year 2024: File in April 2025 (or October 2025 with an extension)
Tax Year 2025: File in April 2026 (or October 2026 with an extension)
How does the standard deduction work?
The standard deduction is a valuable tool that can reduce your taxable income when filing your tax return. Updated annually for inflation, the standard deduction varies based on your filing status. However, it's important to note that certain taxpayers cannot claim the standard deduction if they choose to itemize their deductions instead.
Example:
If you earned $99,600 in 2024 and file as a single taxpayer, taking the standard deduction of $14,600 will reduce your taxable income to $85,000.
Standard deductions
Filing Status | 2024 Standard Deduction | 2025 Standard Deduction |
Single/ Married Filing Separately | $14,600 | $15,000 |
Married Filing Jointly/ Qualifying Surviving Spouse | $29,200 | $30,000 |
Head of Household | $21,900 | $22,500 |
Dependent | $1,300 | $1,350 |
65+ Age or Blindness Married/Surviving Spouse | $1,550 | $1,600 |
65+ Age or Blindness Single/Head-of-household | $1,950 | $2,000 |
Source: IRS
Key points you need to know before calculating your tax liability:
1. Tax brackets determine the tax rate you pay on your highest dollar of taxable income.
2. This doesn't mean the entire income gets taxed at that rate.
3. Each bracket has its own tax rate, applied only to the income within that range.
2024 tax brackets
Tax rate | Single Filers | Married Filing Separately | Married Filing Jointly |
37% | $609,351 or more | $365,601 or more | $731,201 or more |
35% | $243,726 to $609,350 | $243,726 to $365,600 | $487,451 to $731,200 |
32% | $191,951 to $243,725 | $191,951 to $243,725 | $383,901 to $487,450 |
24% | $100,526 to $191,950 | $100,526 to $191,950 | $201,051 to $383,900 |
22% | $47,151 to $100,525 | $47,151 to $100,525 | $94,301 to $201,050 |
12% | $11,601 to $47,150 | $11,601 to $47,150 | $23,201 to $94,300 |
10% | $0 to $11,600 | $0 to $11,600 | $0 to $23,200 |
Example Scenario for 2024
After taking the deduction, your taxable income is $85,000 as a single filer, falling under the 22% bracket. However, you won't pay it on your entire income. Here's how the calculation breaks down:
10% on the first $11,600 = $1,160
12% on amounts between $11,601 and $47,150 = ($47,150 - $11,601 = $35,549) × 12% = $4,265.88
22% on amounts between $47,151 and $85,000 = ($85,000 - $47,151 = $37,849) × 22% = $8,326.78
Total Tax Liability= $1,160 (10%) + $4,265.88 (12%) + $8,326.78 (22%) = $13,752.66
2025 tax brackets
Tax rate | Single Filers | Married Filing Separately | Married Filing Jointly |
37% | $626,351 or more | $375,801 or more | $751,601 or more |
35% | $250,526 to $626,350 | $250,526 to $375,800 | $501,051 to $751,600 |
32% | $197,301 to $250,525 | $197,301 to $250,525 | $394,601 to $501,050 |
24% | $103,351 to $197,300 | $103,351 to $197,300 | $206,701 to $394,600 |
22% | $48,476 to $103,350 | $48,476 to $103,350 | $96,951 to $206,700 |
12% | $11,926 to $48,475 | $11,926 to $48,475 | $23,851 to $96,950 |
10% | $0 to 11,925 | $0 to $11,925 | $0 to $23,850 |
Staying informed about the latest rules is essential for effective tax planning. As always, if you need help with your tax filing, don't hesitate to contact us. Our team of knowledgeable Certified Public Accountants (CPAs) is ready to provide expert guidance.
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