What are the Tax Brackets and Federal Income Tax Rates for the 2025-2026 Tax Year?
Did you know that the Internal Revenue Service (IRS) adjusts 2025 tax brackets to account for inflation? Yes! The numbers you saw on your 2024 return probably will not be the same in 2025. These changes can affect how much tax you owe and whether you are eligible for certain tax credits or deductions.
But let’s be honest. Keeping track of all these changes is not exactly fun. There is a lot to absorb. That is why this article breaks it down into plain English.
Table of Contents
So, if you are filing your taxes for the 2025 tax year, here is a breakdown of the major changes you should know:
1. Federal income tax
If you earn money in the U.S., you will pay federal income tax on it. The U.S. uses something called a progressive tax system, which means the more money you earn in a year, the higher the percentage of tax you will pay on your earnings. Federal income tax is applied using marginal tax rates. So, your income is divided into brackets, and each one gets taxed at a different rate.
For 2025, there are seven federal income tax brackets. These are:
- 10%
- 12%
- 22%
- 24%
- 32%
- 35%
- 37%
The bracket you fall into depends on your filing status. Here’s a quick snapshot of how this works in 2025:
2025 tax brackets and federal income tax rates for single filers
| Tax rate | US tax brackets 2025 |
| 10% | $0 to $11,925 |
| 12% | $11,925 to $48,475 |
| 22% | $48,475 to $103,350 |
| 24% | $103,350 to $197,300 |
| 32% | $197,300 to $250,525 |
| 35% | $250,525 to $626,350 |
| 37% | $626,350 or more |
2025 tax brackets and federal income tax rates for married individuals filing joint returns
| Tax rate | US tax brackets 2025 |
| 10% | $0 to $23,850 |
| 12% | $23,850 to $96,950 |
| 22% | $96,950 to $206,700 |
| 24% | $206,700 to $394,600 |
| 32% | $394,600 to $501,050 |
| 35% | $501,050 to $751,600 |
| 37% | $751,600 or more |
2025 federal income tax brackets and rate for heads of households
| Tax rate | US tax brackets 2025 |
| 10% | $0 to $17,000 |
| 12% | $17,000 to $64,850 |
| 22% | $64,850 to $103,350 |
| 24% | $103,350 to $197,300 |
| 32% | $197,300 to $250,500 |
| 35% | $250,500 to $626,350 |
| 37% | $626,350 or more |
a. Standard deduction
The standard deduction is a fixed amount that you can subtract from your total annual earnings before calculating your taxable income. This is a simple and assured tax deduction that you can make without needing to provide any proof of any expenses or investments. Here are the standard deduction limits for different filing statuses in 2025:
| Filing status | Standard deduction |
| Single | $15,000.00 |
| Married filing jointly | $30,000.00 |
| Head of household | $22,500.00 |
b. Capital gains tax
Capital gains tax is what you pay on the profits you earn from selling your capital assets. These include things like stocks, bonds, mutual funds, and other assets. Now, there are two types of capital gains – short-term and long-term, and they are taxed differently.
Short-term gains apply when you sell an asset you have held for one year or less. These are taxed as ordinary income. So, the tax rate depends on your federal income tax bracket and filing status (as shown in the 2025 tax tables above).
Long-term gains apply to assets you have held for more than one year. These gains are taxed at lower, more favorable rates. Here’s how it works for 2025:
Capital gains 2025 tax brackets for single filers
| Tax rate | Taxable income |
| 0% | Taxable income over $0.00 |
| 15% | Taxable income over $48,350.00 |
| 20% | Taxable income over $533,400.00 |
Capital gains 2025 tax brackets for head of household
| Tax rate | Taxable income |
| 0% | Taxable income over $0.00 |
| 15% | Taxable income over $64,750.00 |
| 20% | Taxable income over $566,700.00 |
Capital gains 2025 tax brackets for married filing jointly
| Tax rate | Taxable income |
| 0% | Taxable income over $0.00 |
| 15% | Taxable income over $96,700.00 |
| 20% | Taxable income over $600,050.00 |
c. Alternative Minimum Tax (AMT)
AMT is a separate tax system created to make sure there is no parity in taxes and that high-income earners pay their fair share of taxes. As per AMT, you are required to calculate your tax under both systems and pay whichever one is higher.
There are two tax rates for AMT – 26% and 28%.
Here’s the exemption amount for AMT in 2025:
| Filing status | Exemption amount |
| Unmarried individuals | $88,100.00 |
| Married filing jointly | $137,000.00 |
If your income gets too high, that exemption begins to phase out. Here are the 2025 thresholds:
Alternative Minimum Tax (AMT) exemption phaseout thresholds
| Filing status | Exemption amount |
| Unmarried individuals | $626,350 |
| Married filing jointly | $1,252,700 |
d. Earned income tax credit
If you are working and earning a low to moderate income, you may be able to claim the Earned Income Tax Credit (EITC). The EITC is a tax credit that was specially designed to help people who are earning a modest income.
Here’s the basic EITC checklist. You must meet all of the following conditions to be eligible for the EITC in 2025:
- You must have a valid Social Security number
- You must be a U.S. citizen or a resident alien for the entire year
- You must have earned income
- You must have investment income under the IRS limit
- You must not have filed Form 2555 (Foreign Earned Income)
Earned income tax credit for single filers
| No children | One child | Two children | Three or more children | |
| Income at max credit | $8,490.00 | $12,730.00 | $17,880.00 | $17,880.00 |
| Maximum credit | $649.00 | $4,328.00 | $7,152.00 | $8,046.00 |
| Phaseout begins | $10,620.00 | $23,350.00 | $23,350.00 | $23,350.00 |
| Phaseout ends (credit equals zero) | $19,104.00 | $50,434.00 | $57,310.00 | $61,555.00 |
Earned income tax credit for head of household
| No children | One child | Two children | Three or more children | |
| Income at max credit | $8,490.00 | $12,730.00 | $17,880.00 | $17,880.00 |
| Maximum credit | $649.00 | $4,328.00 | $7,152.00 | $8,046.00 |
| Phaseout begins | $10,620.00 | $23,350.00 | $23,350.00 | $23,350.00 |
| Phaseout ends (credit equals zero) | $19,104.00 | $50,434.00 | $57,310.00 | $61,555.00 |
Earned income tax credit for married filing jointly
| No children | One child | Two children | Three or more children | |
| Income at max credit | $8,490.00 | $12,730.00 | $17,880.00 | $17,880.00 |
| Maximum credit | $649.00 | $4,328.00 | $7,152.00 | $8,046.00 |
| Phaseout begins | $17,730.00 | $30,470.00 | $30,470.00 | $30,470.00 |
| Phaseout ends (credit equals zero) | $26,214.00 | $57,554.00 | $64,430.00 | $68,675.00 |
| Income at max credit | $8,490.00 | $12,730.00 | $17,880.00 | $17,880.00 |
Some groups have special qualifying rules for EITC. These include:
- Military members
- Taxpayers and their relatives with disabilities
- Clergy members
If you fall under any of these three categories, you can speak to a financial advisor to understand the specific rules that apply to you.
2. State tax
The state tax brackets can vary across the country. Some states keep things simple. Others? Not so much. Here’s a quick look at how it all works:
| State | Tax rates |
| Alabama | 2% to 5% |
| Alaska | No income tax |
| Arizona | 2.5% |
| Arkansas | 2% to 3.9% |
| California | 1% to 13.3% |
| Colorado | 4.4% |
| Connecticut | 2% to 6.99% |
| Delaware | 2.2% to 6.6% |
| District of Columbia | 4% to 10.75% |
| Florida | No income tax |
| Georgia | 5.39% |
| Hawaii | 1.4% to 11% |
| Idaho | 5.695% |
| Illinois | 4.95% |
| Indiana | 3% |
| Iowa | 3.8% |
| Kansas | 5.2% to 5.58% |
| Kentucky | 4% |
| Louisiana | 3% |
| Maine | 5.8% to 7.15% |
| Maryland | 2% to 5.75% |
| Massachusetts | 5% to 9% |
| Michigan | 4.25% |
| Minnesota | 5.35% to 9.85% |
| Mississippi | 4.4% |
| Missouri | 2% to 4.7% |
| Montana | 4.7% to 5.9% |
| Nebraska | 2.46% to 5.2% |
| Nevada | No income tax |
| New Hampshire | No income tax |
| New Jersey | 1.4% to 10.75% |
| New Mexico | 1.5% to 5.9% |
| New York | 4% to 10.9% |
| North Carolina | 4.25% |
| North Dakota | 1.95% to 2.5% |
| Ohio | 2.75% to 3.5% |
| Oklahoma | 0.25% to 4.75% |
| Oregon | 4.75% to 9.9% |
| Pennsylvania | 3.07% |
| Rhode Island | 3.75% to 5.99% |
| South Carolina | 0% to 6.2% |
| South Dakota | No income tax |
| Tennessee | No income tax |
| Texas | No income tax |
| Utah | 4.55% |
| Vermont | 3.35% to 8.75% |
| Virginia | 2% to 5.75% |
| Washington | No income tax. However, the state does charge a 7% long-term capital gains tax on profits above the state’s standard deduction. |
| West Virginia | 2.22% to 4.82% |
| Wisconsin | 3.5% to 7.65% |
| Wyoming | No income tax |
Where you live plays a huge role in how much tax you pay. So, make sure to make a note of the tax rules in your state and consult with a financial advisor if necessary.
a. Child tax credit
If you are a parent, you are probably already familiar with the Child Tax Credit. For 2025, the maximum credit remains at $2,000 per qualifying child, and it is not adjusted for inflation, so that part stays the same as the previous year. However, the refundable portion, which is the part you can get back even if you owe no tax, will stay at $1,700 in 2025.
If you have kids and meet the income limits, you can potentially take $2,000 off your tax bill per child.
- Adoption credits: The government also provides tax benefits to parents who wish to adopt kids. Since adopting a child can be an expensive process, you can get some tax relief to save money. For 2025, the maximum adoption credit is $17,280, which is up from $16,810 in 2024. This applies whether you are adopting domestically or internationally.
- Itemized deductions: There is good news for you if you choose to itemize this year. Itemized deductions can be deducted from your Adjusted Gross Income (AGI) and help reduce your taxable income for a year. You can claim itemized deductions on qualified expenses, such as medical and dental expenses, home mortgage interest, casualty and theft losses, and gifts to charity, among other things.
Just like in 2024, there is no limit on the value of itemized deductions in 2025. You can credit the Tax Cuts and Jobs Act of 2017 for this.
b. Medical Savings Accounts (MSA)
If you are using an MSA, which is available to self-employed folks or employees of small businesses, here’s what is changing in 2025:
- For self-only coverage, your plan’s deductible must be at least $2,850, up from $2,800 and no more than $4,300
- Your maximum out-of-pocket costs can now go up to $5,700, up from $5,550
- For family coverage, your deductible needs to be at least $5,700, up from $5,550, with a cap of $8,550
- The family out-of-pocket limit rises to $10,500, up from $10,200
These increases, though minor, can help you budget healthcare costs.
c. Foreign earned income exclusion
Working abroad? There is some good news for you, as well!
You can exclude up to $130,000 in foreign earned income from your U.S. taxes in 2025. That is up from $126,500 in 2024. If you qualify for this exclusion, the increase can keep more of your earnings in your pocket rather than going away in taxes.
d. Estate tax credits and gift tax exclusion
Let’s talk estate planning for a moment. In 2025:
- The basic exclusion amount for federal estate tax is $13.99 million per individual, up from $13.61 million in 2024.
- The annual gift tax exclusion has been increased to $19,000 per recipient, up from $18,000. This implies that you can gift this amount to as many people as you would like without having to report it or use your lifetime exemption. For non-citizen spouses, the annual exclusion for gifts has been increased to $190,000, also up from $185,000.
Now is a good time to work with a financial advisor or estate attorney and revisit your estate planning strategies.
e. Qualified transportation fringe benefit
The monthly limit for qualified transportation fringe benefits and for qualified parking has been increased to $325, up from $315 in 2024. While this may not sound like much, it can help you reduce your taxable income. Moreover, since every bit counts, you must not let this one go wasted and claim it if you qualify for it.
f. Health flexible spending cafeteria plans
If your job offers a health Flexible Spending Arrangement (FSA), you will be able to set aside up to $3,300 in pre-tax dollars in 2025. This is up from $3,200 in 2024. Even better? If your plan allows you to carry over unused amounts into the next year, the maximum carryover has also been increased in 2025 to $660, a modest bump from $640. Again, while this may not seem like a substantial hike, it does offer some extra wiggle room in your tax planning.
So, how can you take advantage of these new 2025 tax brackets and other changes?
- Make sure you are using the right tax brackets based on your income and filing status. Filing under the wrong bracket can lead to errors, penalties, or even overpaying your taxes.
- Before you sell any investments or assets, check whether they fall under short-term or long-term capital gains. It is important to sell your assets at the right time to lower the amount you pay in tax.
- Be aware of taxes that specifically apply to you. For instance, if you are a high-income earner, you may need to factor in AMT. Make sure you know if you are subject to it and how it might affect your return.
- Consider getting help. Taxes can be complicated, especially with annual updates. Moreover, you may not know of all the credits, deductions, and exceptions that exist and the ones you may be eligible for. A qualified financial advisor or tax planner can help you understand these so you can file your taxes without mistakes. Use our free advisor match tool to match with 2 to 3 experienced tax professionals who can help you file your taxes for 2025.
