How income tax brackets work and what's changing for 2025

Whether you are an early filer or someone who tends to hold off filing up until Tax Day, it is helpful to stay on top of your tax bracket. Tracking this will help you better understand how much you can expect to pay on your taxable income whenever you do go to file.

Ahead of each new year, the IRS announces updated tax brackets, adjusted to account for inflation. These regular updates are designed to "avoid bracket creep, where people are pushed into higher tax brackets simply because of cost-of-living pay increases," said Bankrate.

For tax year 2025 (meaning the updates will apply to returns filed in 2026), there are some changes coming, though they are not as sizable as in years past. Because inflation is "cooling to its lowest level in three years, the IRS' annual adjustments are likewise becoming smaller," said CBS News MoneyWatch. Still, said the outlet, annual income thresholds are "rising by about 2.8% from 2024."

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First, a quick refresher on how income tax brackets work

Before we dive straight into the numbers, let's make sure we're all on the same page as far as how income tax brackets work. Put simply, a tax bracket "is the range of incomes taxed at given rates, which typically differ depending on filing status," said the Tax Foundation. Filing statuses include single filers, married couples filing jointly, married couples filing separately, and head of household filers, each of which has their own distinct tax brackets.

In the U.S., rates go up the higher someone's income is. So, a person who earns under $10,000 is taxed at a lower rate than someone whose annual taxable income is over $500,000. There are seven different tax brackets in the U.S., starting at 10% and topping out at 37%.

What are the 2025 income tax brackets and rates?

For federal income tax returns filed for tax year 2025 (meaning, the tax returns you file in early 2026), the following tax brackets and rates apply:

How will tax brackets change for 2025?

"With inflation cooling," the IRS tax bracket adjustment for tax year 2025 is a "modest 2.8%, close to half of the 5.4% bump seen in 2024 and far less than the 7.1% hike in 2023," said CNBC Select. So, for example," this translates to "the new threshold for the 10% tax bracket for married couples filing jointly" increasing "to $23,850 in 2025," up "from its 2024 threshold of $23,200," said CBS News MarketWatch.

However, one of the lingering effects of inflation is still being seen "in the 'width' of the 2025 brackets, which have become comparatively wider," said Kiplinger, referring to the "difference between the lowest and highest dollar amounts in a tax bracket." When tax brackets are wider, this helps to "prevent 'bracket creep,'" effectively lowering "the likelihood of being pushed into a higher tax bracket if your income remains constant or grows slower than inflation," said the outlet.

Can you lower your tax bracket?

It certainly is possible to lower your tax bracket, and there are a number of ways you can go about doing it. This includes:

• Filing under a different status: According to USA Today, how you file could affect which tax bracket you qualify for: "If you're married, filing a joint return with your spouse could qualify you for a lower tax bracket. Or depending on your income and circumstances, you may lower your tax bracket by filing an individual return."
• Contributing to a 401(k) or IRA: You may also lower your tax bracket by contributing to a 401(k) plan, as your contributions will lower your taxable income. Contributing to an IRA could also allow you to secure a tax deduction, which could help with lowering your tax bracket.
• Looking at the effect of standard vs. itemized deductions: USA Today also advises calculating how taking the standard deduction as opposed to itemized deductions shifts things, "since it could put you in a lower bracket, depending on your financial situation."