IRS Announces Major Tax Changes for 2025

As the IRS prepares for the 2025 tax season, significant changes have been announced that will affect tax brackets, standard deductions, and various credits. The updated tax brackets reflect inflation adjustments, potentially lowering tax burdens for many taxpayers, especially middle-income families. The standard deduction has also increased, providing further relief to taxpayers, while the Earned Income Credit has been adjusted to offer more support to eligible individuals and families. Additionally, interest rates for tax overpayments and underpayments will decrease for the first time since 2020, starting January 1, 2025. Retirement plan contribution limits have been raised, facilitating greater tax-advantaged savings. These reforms come amid uncertainty regarding potential changes under the incoming Trump administration and its impact on IRS funding and future tax policies.