Federal income tax brackets are adjusting for inflation in 2025, potentially leading to slightly higher take-home pay. However, the impact may be offset by rising prices for essentials. Experts advise monitoring tax withholdings throughout the year to avoid surprises.
Your paycheck could be slightly bigger in 2025 due to federal income tax brackets inflation adjustments. Regardless, you should monitor federal and state tax withholdings throughout the year to avoid a surprise tax bill. The yearly inflation adjustment is 'much less drastic this year' amid cooling inflation, said certified public accountant Brian Long, senior tax advisor at Wealth Enhancement in Minneapolis.
It's time to boost 401(k) contributions for 2025 — here's how much you can saveThe 10 fastest-growing jobs in the U.S., according to LinkedIn—many can be remote and pay over $100,000 If you're starting 2025 with similar wages to 2024, your take-home pay — or compensation after taxes and benefit deductions — could be a little higher, depending on 'When all the tax brackets go up, but your salary stays the same, relatively, that puts you on a lower rung of the ladder,' he said. The federal income tax brackets show how much you owe on each part of your 'taxable income,' which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income. 'Even if you make a little more than last year, you could actually pay less in tax in 2025 compared to 2024,' because the standard deduction also increased, Long said. For 2025, the standard deduction increases to $30,000 for married couples filing jointly, up from $29,200 in 2024. The tax break is also larger for single filers, who can claim $15,000 in 2025, a bump from $14,600.Despite tax bracket changes, many Americans won't feel the pay increase amid elevated prices for certain expenses, said Sheneya Wilson, a CPA and founder of Fola Financial in New York. While inflation is no longer accelerating, there was an uptick in the cost of groceries, gasoline and new cars in November, according to the Bureau of Labor Statistics. Typically, if you withhold too much from your paycheck, you can expect a refund, whereas not withholding enough often results in taxes owe
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2025 Paycheck Increase: Federal Tax Brackets Adjusted for InflationFederal income tax brackets are adjusted for inflation in 2025, potentially leading to slightly higher take-home pay. However, individuals are advised to monitor their withholdings throughout the year to avoid tax surprises. While the standard deduction also increased, rising prices for certain expenses may offset the impact of the tax adjustments for many Americans.
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