BY SUZANNE HAZLETT, MBA, CIMA®, CFP®
“America is a land of taxation that was founded to avoid taxation.” – Laurence J. Peter
The Internal Revenue Service (IRS) announced this month adjustments to more than 60 tax provisions. These new figures will apply when you file your 2025 federal income tax return in 2026. You might wonder how changes in tax rate schedules, tax tables, and cost of living adjustments might affect your household.
If you expect to make significantly more or less money in 2025 or change your personal circumstances, such as marrying, launching a new business, having a child, or adopting a child, you may benefit from consulting with your tax advisor about adjusting your income tax withholding elections or altering your estimated tax payments.
Standard Deductions —Beginning January 2025, the standard deduction amount will increase to $15,000 for individuals and married couples filing separately. Married couples filing jointly will see an increase in the deduction to $30,000. For example, if a married couple filing jointly has a household income of $100,000, the $30,000 standard deduction reduces the taxable income to $70,000. Approximately 90% of taxpayers claim the standard deduction and no longer itemize deductions.
Capital Gains Rates — Capital gains rates will not change for 2025, but the rate brackets will change. Most taxpayers pay a maximum 15% rate, but a 20% tax rate applies for households with taxable income exceeding the thresholds for the 37% ordinary tax rate.
Federal Estate + Gift Tax — When gifting money to a non-spouse, the gift may be taxable to the donor if it exceeds the annual gift tax exclusion amount. This amount will increase to $19,000 in 2025, up from $18,000 in 2024. If you and your spouse combine gifts to one recipient, you may gift $38,000 to an individual without federal gift tax consequences in 2025.
Qualified Charitable Distributions (QCD) — IRA owners who have reached the age of 70.5 can distribute funds directly from their IRA to a qualified charity without incurring taxes on the amount withdrawn. The total dollar amount of QCDs that can be distributed annually is expected to increase to $108,000 in 2025. This is a particularly helpful tool for charitably minded owners of large IRAs.
Without inflation adjustments to tax provisions, inflation would have a more significant negative impact on a household’s taxes. To learn more about the affected tax provisions, visit IRS.gov. For your unique situation, we recommend you consult your tax professional.
Suzanne Hazlett, MBA, CIMA®, CFP®, is a Certified Investment Management Analyst® and CERTIFIED FINANCIAL PLANNERTM professional. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities are offered through Raymond James Financial Services, Inc., member FINRA/SIPC. HAZLETT WEALTH MANAGEMENT, LLC is independent of Raymond James and is not a registered broker/dealer. Raymond James does not offer tax advice. 675 Sun Valley Road, Suite J1 + J2, Ketchum, Idaho, 83340 208.726.0605 HazlettWealthManagement.com