The IRS has unveiled new inflation adjustments for 2025, with a 2.8% increase in income thresholds, marking the smallest increase in several years. This adjustment reflects the cooling inflation in the U.S. following larger increases during the pandemic.

The purpose of these adjustments is to prevent taxpayers from being pushed into higher tax brackets due to cost-of-living adjustments without a real increase in their standard of living. In 2025, the threshold for the 10% tax bracket for married couples filing jointly will rise to $23,850, while the standard deduction will increase to $30,000.

You may also be interested in its Spanish version: El IRS anuncia ajustes para el 2025

The U.S. tax system is progressive, meaning tax rates increase as income rises. For example, those earning more than $23,850 will pay 10% on that amount and 12% on additional income up to $96,950.