The standard deduction will be increased next year, so you can pay less tax. Applicable to 2026 filing_2

On October 22, the Internal Revenue Service (IRS) announced adjustments for the 2025 tax year, revealing that the standard deduction for single filers will increase to $15,000, which is a $400 increase from 2024. For married couples filing jointly, the standard deduction will rise to $30,000, up by $800 from the previous year. Additionally, heads of household will see their standard deduction increase to $22,500, reflecting a $600 rise.

These adjustments are part of the IRS’s annual practice of modifying standard deductions based on inflation rates. While there has been a recent downward trend in inflation, the increases in standard deductions for 2025 are notably less than those seen in the past few years. These changes will take effect for tax returns filed in the 2026 tax season.

The IRS also raised the income thresholds for all seven federal tax brackets. The top tax rate remains at 37%, applying to single filers with incomes exceeding $626,350 and married couples filing jointly with incomes above $751,600. For context, in 2024, the threshold for the highest tax rate for single filers stood at $609,350.

Here’s a breakdown of the income brackets for single filers: those earning over $250,525 will be taxed at 35%; those above $197,300 at 32%; incomes over $103,350 at 24%; those earning more than $48,475 at 22%; incomes exceeding $11,925 at 12%; and those earning $11,925 or less at 10%.

For married couples filing jointly, the brackets are as follows: incomes over $501,051 will face a 35% tax rate; those exceeding $394,601 will be taxed at 32%; earnings above $206,701 will incur a 24% rate; incomes above $96,951 will be taxed at 22%; amounts over $23,851 at 12%; and couples earning $23,850 or less will pay a 10% rate.

While the U.S. reported a decline in inflation to its lowest level in over three years as of September, many Americans continue to feel pressure from rising costs in key areas such as healthcare, clothing, auto insurance, and airfare. Core inflation figures remain elevated.

Earlier in October, the Social Security Administration announced a 2.5% cost-of-living adjustment (COLA) for social security recipients starting in January. This adjustment means millions will see their monthly checks increase by an average of over $50.

The COLA adjustment aligns with the recent announcements regarding standard deduction changes, reflecting a slower pace than the previous two years. In 2023, adjustments reached a historic high of 8.7% due to a 40-year peak in inflation, while the adjustment for 2024 was 3.2%. The smaller increase for next year underscores the easing inflation conditions.