​2025 Tax Season Changes: What are the modifications to consider before filing your return? 

AUSTIN CALDWELL
24/01/2025
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11:12
CSTThe Internal Revenue Service (IRS) announced the annual inflation adjustments for fiscal year 2025.The PDF of Revenue Procedure 2024-40 provides detailed information on adjustments and changes to more than 60 tax provisions that will affect taxpayers when they file their returns in 2026.The fiscal year 2025 adjustments described below generally apply to income tax returns filed beginning in the 2026 tax season.Tax items for fiscal year 2025 of most interest to many taxpayers include the following dollar amounts:Standard deductions: For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction increases to $15,000 for 2025, an increase of $400 from 2024.For married couples filing a joint return, the standard deduction increases to $30,000, an increase of $800 compared to 2024.For the 2025 tax year, the exemption amount for single individuals increases to $88,100 ($68,650 for married individuals filing a separate return) and begins to phase out at $626,350.For married couples filing a joint return, the exemption amount increases to $137,000 and begins to phase out at $1,252,700.Earned Income Tax Credits. For qualified taxpayers who have three or more qualifying children, the maximum Earned Income Tax Credit amount for fiscal year 2025 is $8,046, an increase from $7,830 for fiscal year 2024.The income procedure contains a table that provides the maximum amount of EITC for other categories and the phase-in income thresholds.Qualified transportation fringe benefit. For fiscal year 2025, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $325, up from $315 in fiscal year 2024.Health flexible spending arrangement cafeteria plans. For taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,300, up from $3,200 in 2024.Medical savings accounts. For fiscal year 2025, participants who have individual plan coverage must have an annual deductible that is no less than $2,850 (an increase of $50 from the prior fiscal year), but not more than $4,300 (an increase of $150 from the prior fiscal year)The maximum out-of-pocket amount increases to $5,700, compared to $5,550 in fiscal 2024.For family coverage in fiscal year 2025, the annual deductible is no less than $5,700, up from $5,550 in fiscal year 2024; however, the deductible may not be more than $8,550, an increase of $200 compared to the limit for fiscal year 2024.For family coverage, the out-of-pocket limit is $10,500 for fiscal year 2025, compared to $10,200 for fiscal year 2024Exclusion of foreign earned income. For fiscal year 2025, the foreign earned income exclusion increases to $130,000, up from $126,500 in fiscal year 2024.Estate tax credit. The estates of decedents who died during 2025 have a basic exclusion amount of $13,990,000, up from