As you tackle your 2024 tax filing, it may be tempting to focus solely on your immediate tax bill. However, it’s also a great time to look ahead and familiarize yourself with key tax changes for 2025. Understanding these updates now can help you plan more effectively and avoid surprises down the road.
Here are answers to five common questions about tax limits and thresholds for 2025:
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How much can I contribute to an IRA?
If you qualify, you can contribute up to $7,000 to a traditional or Roth IRA in 2025, or 100% of your earned income, whichever is less. If you’re age 50 or older, you can also make an additional $1,000 catch-up contribution. These limits remain unchanged from 2024.
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What’s the maximum I can contribute to a 401(k) plan?
For 2025, the elective deferral limit for a 401(k) or 403(b) plan is $23,500, up from $23,000 in 2024. If you’re age 50 or older, you can make an additional $7,500 catch-up contribution (unchanged from 2024).
Additionally, new rules effective in 2025 allow employees ages 60 to 63 to make special catch-up contributions of up to $11,250, which includes the standard $7,500 catch-up limit.
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When do I stop paying Social Security tax on my earnings?
The Social Security wage base — the maximum income subject to Social Security tax — is $176,100 for 2025, up from $168,600 in 2024. You won’t owe Social Security tax on income above this amount, although Medicare tax continues to apply to all earnings.
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What are the standard deduction amounts for 2025?
The standard deduction increases slightly for 2025:
- Married filing jointly: $30,000 (up from $29,200 in 2024)
- Single filers: $15,000 (up from $14,600)
- Heads of household: $22,500 (up from $21,900)
Unless your itemized deductions (such as charitable donations or mortgage interest) exceed the standard deduction, you’ll likely take the standard deduction.
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How much can I gift without filing a gift tax return?
The annual gift tax exclusion for 2025 is $19,000, up from $18,000 in 2024. This means you can give up to $19,000 per recipient without having to file a gift tax return.
Plan Ahead for 2025
These are just a few of the important tax figures that may affect your planning. Staying informed can help you make the most of available tax-saving opportunities. For personalized guidance tailored to your unique situation, reach out to your trusted HoganTaylor Wealth or tax advisor.
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INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
