2025 brings tax law changes to the Premium Tax Credit, Required Minimum Distributions (RMDs), and the introduction of new green energy tax credits. You may be able to claim the new tax credits if you’ve bought an electric vehicle or certain energy-efficient appliances for your home.
It should be noted that these changes affect returns for tax year 2024 – the taxes you’ll file in 2025. Keep reading to learn more about these changes and how they will affect how you file in 2025!
Key takeaways: What are the tax law changes for tax year 2024?
- There are still seven tax brackets; however, the income brackets for each rate have been adjusted slightly to account for inflation.
- For tax year 2024, the standard deduction was slightly adjusted, increasing to $14,600 for individuals filing as single or those married but filing separately. Heads of household will see the deduction rise to $21,900. Married couples filing together will have a standard deduction of $29,200.
- There were a few changes to RMDs, as well as increases to income and contribution limits for IRA and 401(k) retirement savings accounts.
Standard deduction increase
Just as the IRS adjusts tax brackets each year to keep up with inflation, the standard deduction works the same way. This year, the standard deduction has risen a bit for everyone.
View the chart below to see how this year’s standard deduction stacks up against the 2023 amounts.
| Filing Status | Tax Year 2024 | Tax Year 2023 |
| Married Filing Jointly | $29,200 | $27,700 |
| Head of Household | $21,900 | $20,800 |
| Single | $14,600 | $13,850 |
| Married Filing Separately | $14,600 | $13,850 |
Income tax bracket adjustments
Once again, tax brackets, eligibility thresholds for certain tax credits and deductions, and the standard deduction were increased to account for inflation.
If you had an increase in income in 2024, you may have to pay more in taxes. But since the U.S. has a progressive tax system, it helps cushion you from having to pay more when you file. The system levies different tax rates on different portions of your income, so you usually won’t have to worry about paying more if you got a new job or raise within the year.
Even if your income did bump you up into a new tax bracket, your tax rate will likely increase by just a few percentage points, depending on how large your pay raise was in 2024. See where your income falls – and view current and previous income tax brackets.
Current income tax brackets for tax year 2024
Single filers
| Taxable income between: | Taxes due: |
| $0-$11,600 | 10% of taxable income |
| $11,601 to $47,150 | $1,160 + 12% of the amount over $11,600 |
| $47,151 to $100,525 | $5,426 + 22% of the amount over $47,150 |
| $100,526 to $191,950 | $17,168.50 + 24% of the amount over $100,525 |
| $191,951 to $243,725 | $39,110.50 + 32% of the amount over $191,950 |
| $243,726 to $609,350 | $55,678.50 + 35% of the amount over $243,725 |
| $609,351 or more | $183,647.25 + 37% of the amount over $609,350 |
Married Filing Separately
| Taxable income between: | Taxes due: |
| $0-$11,600 | 10% of taxable income |
| $11,601 to $47,150 | $1,160 + 12% of the amount over $11,600 |
| $47,151 to $100,525 | $5,426 + 22% of the amount over $47,150 |
| $100,526 to $191,950 | $17,168.50 + 24% of the amount over $100,525 |
| $191,951 to $243,725 | $39,110.50 + 32% of the amount over $191,950 |
| $243,726 to $365,600 | $55,678.50 + 35% of the amount over $243,725 |
| $365,601 or more | $98,334.75 + 37% of the amount over $609,350 |
Married Filing Jointly (and Qualifying Widowers with Dependent)
| Taxable income between: | Taxes due: |
| $0 to $23,200. | 10% of taxable income |
| $23,201 to $94,300 | $2,320 + 12% of the amount over $23,200 |
| $94,301 to $201,050 | $10,852 + 22% of the amount over $94,300 |
| $201,051 to $383,900 | $34,337 + 24% of the amount over $201,050 |
| $383,901 to $487,450 | $78,221 + 32% of the amount over $383,900 |
| $487,451 to $731,200 | $111,357 + 35% of the amount over $487,450 |
| $731,201 or more | $196,669.50 + 37% of the amount over $731,200 |
Head of Household
| Taxable income between: | Taxes due: |
| $0 to $16,550 | 10% of taxable income |
| $16,551 to $63,100 | $1,655 + 12% of the amount over $16,550 |
| $63,101 to $100,500 | $7,241 + 22% of the amount over $63,100 |
| $100,501 to $191,950 | $15,469 + 24% of the amount over $100,500 |
| $191,951 to $243,700 | $37,417 + 32% of the amount over $191,950 |
| $243,701 to $609,350 | $53,977 + 35% of the amount over $243,700 |
| $609,351 or more | $181,954.50 + 37% of the amount over $609,350 |
Tax credit changes
A tax credit is a dollar amount that can be subtracted from your tax bill after you’ve claimed your deductions. Think of it as a coupon code you enter at checkout when you buy something online.
There are tons of tax credits available to claim depending on your filing status, dependents, financial situation, and more. Here’s what you need to know about popular and newly refreshed tax credits for tax year 2024.
Earned Income Tax Credit (EITC) increases for tax year 2024
The EITC is one of the most popular tax credits designed to help low to middle-income households. The maximum credit amounts have increased. Check out the updated income thresholds below:
Adjusted Gross Income (AGI) Limits
| Number of Dependents | Single, Head of Household, or Widowed Filers | Married Filing Jointly |
| 0 | $18,591 | $25,511 |
| 1 | $49,084 | $56,004 |
| 2 | $55,768 | $62,688 |
| 3+ | $59,899 | $66,819 |
Maximum EITC Amounts
| Number of Dependents | Maximum Credit Amounts |
| 0 | $632 |
| 1 | $4,213 |
| 2 | $6,960 |
| 3+ | $7,830 |
Child Tax Credit
For tax year 2024, the Child Tax Credit is worth up to $2,000 per qualifying child under age 17. You can receive the entire credit if your modified adjusted gross income does not exceed $400,000 for married couples filing jointly, or $200,000 for all other taxpayers. The refundable portion of this credit is $1,700, which is an increase of $100 compared to the 2023 tax year.
Residential Clean Energy Credit and Energy Efficient Home Improvement Credit
Tax year 2024 introduces some new tax credits that may encourage you to go green. For example, there’s the Residential Clean Energy Credit for new installations and upgrades to renewable energy systems, so think of appliances like:
- Solar water heating systems
- Solar electric systems
- Small wind energy systems
- And more!
There’s another new tax credit for clean energy home installations called the Energy Efficient Home Improvement Credit available for up to 30% of the total costs paid for qualifying home improvements.
Clean Vehicle Tax Credit
You can qualify for this tax credit if you’ve purchased a new or used electric or hybrid vehicle in 2024. You may be able claim up to $7,500 if you meet the income and vehicle requirements.
Limit increases for retirement accounts
Tax year 2024 introduces a few changes to RMDs, as well as increases to income and contribution limits for IRA and 401(k) retirement savings accounts. Let’s break down what these changes are and what they mean for your taxes.
RMD updates for 2024
A Required Minimum Distribution is an amount of money you must take out from an employer-sponsored retirement account or IRA once you reach retirement age. RMDs are in place to protect retirement-age taxpayers from paying taxes on their contributions since traditional IRAs and 401(k) accounts use pre-tax dollars.
Starting in tax year 2024, the minimum age required to take your first RMD is now age 73. So, if you turned 73 in 2024, you t need to take your first RMDby April 1, 2025. In addition to this requirement change, the minimum age to take distributions will now be age 75 for anyone born after 1960.
If you are of retirement age with an employer-sponsored 401(k) or traditional IRA, and you forgot to take your RMDs, your contribution will be subject to a 25% excise tax (50% prior to tax year 2023). But there’s good news – this excise tax can be reduced to 10% if you take your RMD within two years of your deadline. Additionally, this penalty can be waived entirely if you can prove that your mistake was due to a reasonable error, and you took steps to rectify the situation.
401(k) and IRA contribution limits increase
To keep up with inflation and the rising cost of living, 401(k) and IRA contribution limits have increased. If you have a 401(k) account, you can now contribute up to $23,000 in 2025 (up $500 from tax year 2023). You can also contribute an additional $8,000 if you’re over age 50 to catch up with your retirement goals.
If you have a traditional or Roth IRA, you can now contribute $7,000 in 2025 ( increase of $500 from tax year 2023). If you’re over age 50, you can contribute an extra $1,000.
New deduction limits for traditional IRA contributions
You can take a deduction up to the limit ($7,000 or $8,000 for those over 50) if you or your spouse do not participate in an employer-sponsored retirement plan. If you do participate in an employer-sponsored plan, then the deduction phases out as your income increases. See the deduction limits based on your filing status and income below:
Single:
- You can get a full deduction if your income is less than $77,000. You can take a partial deduction if your income is between $77,000 and $87,000. If your income is above $87,000, you’re not eligible to deduct your IRA contributions.
Married filing jointly:
- You can get a full deduction if you and your spouse make less than $123,000. You’re eligible for a partial deduction if you make between $123,000 and $143,000. You cannot deduct your IRA contributions if your make more than $143,000.
Let’s say that your spouse participates in an employer-sponsored retirement plan, but you don’t. Then, the deduction limits are a bit different:
Married filing separately:
- You can get a partial deduction if you make less than $10,000. Unfortunately, if you make more than $10,000 a year, you cannot get this deduction.
Married filing jointly:
You can get a full deduction if you make less than $230,000, a partial deduction if you make between $230,000 and $240,000, and nothing if you make more than $240,000.
New income limits for Roth IRAs
Income limits also increased for tax year 2025. See the new income limits by filing status below:
Single or head of household:
- You can contribute to the limit if you make less than $150,000, a reduced amount if you make between $10,000-$165,000 (up from $146,000-$161,000 in tax year 2023), and nothing if you make more than $165,000.
Married filing separately:
- The new limits get complicated with this filing status. If you lived with your spouse for any amount of time in 2024 and you made more than $10,000 within the year, then you can’t contribute to a Roth IRA. But, if you didn’t live with your spouse at all in 2024, then you have the same contribution limits as Single or Head of Household taxpayers (see above).
Married filing jointly:
You can contribute to the limit if you make less than $236,000, a reduced amount if you make $236,000-$246,000 (up from $230,000-$240,000 in tax year 2023), and nothing if you make more than $246,000.
- You can contribute to the limit if you make less than $236,000, a reduced amount if you make $236,000-$246,000 (up from $230,000-$240,000 in tax year 2023), and nothing if you make more than $246,000.
New rules for claiming a dependent
Starting this year, the IRS allows you to file your individual income tax return electronically even if someone else has already claimed your dependent. To do this, you’ll need an Identity Protection Personal Identification Number (IP PIN) for the primary taxpayer. While your return won’t be rejected, any dependent claim issues will be resolved later, which may delay your refund. This change benefits situations like extended families or custody arrangements without hindering your ability to e-file.
Frequently asked questions about tax law changes
Getting your mind wrapped around the latest tax updates can sometimes be overwhelming. Luckily, we’re here with answers to some of the most frequently asked questions about the tax law changes.
Will tax refunds be bigger in 2025?
The amount of your refund depends on your individual financial situation and the tax breaks you claim when filing.
When you file with TaxSlayer, we’ll identify all the credits and deductions you’re entitled to, so you can receive your maximum refund. Start now!
When can I file my 2024 taxes?
You can typically file your taxes once you receive your W-2 from your employer in late January. Get all the important deadlines for tax year 2024 here.
How can I keep up with the latest tax law changes?
As always, we’re here to keep you informed of the latest tax law updates. You can also visit the IRS website as the ultimate tax law authority.
