The IRS has released the latest inflation-adjusted federal income tax brackets that are in effect for tax year 2025.
This wont affect what tax bracket youre in when you file your 2024 taxes in April 2025.
Instead, itll affect any income you earn in 2025 for filing in 2026.
We have the details.
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Note that these tax brackets also apply to married couples filing separately.
Because of salary increases, you might have earned more physical dollars than you did in the previous year.
Even so, that higher income could catapult you into a more aggressive tax bracket meant for higher earners.
Thus, the IRS reviews how the cost of living shifts from year to year.
This keeps taxpayers from moving up into higher tax brackets without a real substantial change in income.
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Tax rates applyonlyto the income within each bracket.
However, you’re able to still itemize your deductions if youd prefer.
Benefits increased by 3.2% in 2024 and 8.7% in 2023.
How Will the New Tax Brackets Affect Me?
The IRS updates tax brackets in response to inflation.
And if your salary grew faster than inflation (hey, good for you!
), theres a small chance you could have graduated to a new tax bracket.
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Timothy Moore is a personal finance writer and Certified Financial Education Instructor.
He covers banks, loans, insurance and taxes for The Penny Hoarder.
Find his work on sites such as USA Today, Business Insider and Forbes.
