The IRS has announced that taxpayers will get higher standard deductions for the 2025 tax year. Let’s explore what this means for you.

Single taxpayers and married taxpayers filing separately: $400 increase

If you’re a single taxpayer, or if you’re married but filing your taxes separately, your standard deduction will rise to $15,000 in the 2025 tax year, which is a $400 increase from 2024. 

Couples filing jointly: $800 increase

If you’re married and filing jointly, your standard deduction will rise to $30,000 in the 2025 tax year, which is an $800 increase from 2024. 

Heads of households: $600 increase

If you’re filing as head of your household, your standard deduction is up to $22,500 in 2025: a $600 increase from 2024.

Tax brackets also increase

Tax brackets have also gone up. Starting in tax year 2025, the highest tax rate, holding steady at 37%, will apply to incomes over $626,350 (for single taxpayers). In 2024, that number is $609,350.

Why is the IRS increasing deductions and tax brackets?

So why is the IRS raising deductions and tax brackets? One word: inflation. Although inflation recently reached its lowest number in over three years, it’s still putting pressure on taxpayers through increased prices. 

Core prices were still high in September, which means medical costs, clothing prices, car insurance, and airline rates are also up. Higher deductions and tax brackets are designed to offset some of those pressures so Americans don’t get hit as hard by inflation.

The increased deductions are lower than they have been in recent years. For example, last year, the IRS increased the standard deduction for single taxpayers by $750, by $1,500 for married couples, and by $1,100 for heads of households. 

Cost of living adjustment (COLA)

Similarly, the Social Security Administration has recently announced that starting in January, cost-of-living benefits will increase by 2.5%. This means that millions of people receiving benefits will now get $50 more per month.

But this adjustment is also lower than it has been in recent years. In 2024, there was a 3.2% increase, and in 2023, an 8.7% increase—the highest increase in the last 40 years. The relatively low increases for 2025 signal that inflation is slowing: which is good news for everyone.