Right now, you’re probably more focused on your 2024 tax return, and that makes sense—it’s due by April 15, 2025, unless you request an extension.
But it’s also smart to get familiar with the tax updates for 2025, especially since some amounts have changed due to inflation. Not all tax figures are adjusted every year, but several important ones have been updated for 2025. Plus, there may be new tax laws coming soon with a new President in office.
Here are answers to common questions about 2025 tax limits:
1. Can I itemize deductions on my 2025 tax return?
If you haven’t been able to itemize deductions recently, that may not change for 2025. Since 2018, many people have taken the standard deduction instead because it’s higher than their itemized deductions. For 2025, here’s the new standard deduction:
Married filing jointly: $30,000 (up from $29,200 in 2024)
Single filers: $15,000 (up from $14,600 in 2024)
Heads of household: $22,500 (up from $21,900 in 2024)
If your itemized deductions (like mortgage interest and medical expenses) are less than these amounts, you should take the standard deduction instead.
2. Can I deduct charitable donations if I take the standard deduction?
No, if you claim the standard deduction, you generally can’t deduct donations on your federal tax return.
3. What’s the IRA contribution limit for 2025?
You can contribute up to $7,000 to a traditional or Roth IRA in 2025. If you’re 50 or older, you can make an extra $1,000 “catch-up” contribution, bringing your total to $8,000. These amounts haven’t changed from 2024.
4. How much can I contribute to my 401(k)?
In 2025, you can contribute up to $23,500 to a 401(k) or 403(b) plan (up from $23,000 in 2024). If you’re 50 or older, you can make an additional $7,500 catch-up contribution.
There’s also a new rule: If you’re between ages 60 and 63, you can make a special catch-up contribution of up to $11,250 in 2025.
5. Do I need to pay FICA tax for a cleaning person I hire?
If you hire a house cleaner or babysitter in 2025, you must pay FICA tax if you pay them more than $2,800 for the year (up from $2,700 in 2024).
6. How much of my income is taxed for Social Security in 2025?
For 2025, the Social Security tax limit is $176,100. This means you won’t pay Social Security tax on any earnings above that amount. However, Medicare tax still applies to all your earnings, no matter how much you make.
7. How much can I give someone without paying gift tax?
You can give up to $19,000 to one person in 2025 without triggering a gift tax return (up from $18,000 in 2024).
8. Will new tax laws affect my 2025 taxes?
Possibly! It’s hard to predict exactly what changes will happen, but lawmakers have been talking about:
Extending or making permanent some tax cuts that expire after 2025
Raising or removing the limit on the state and local tax deduction
Expanding the Child Tax Credit
Making certain income types tax-free, such as tips, overtime pay, and Social Security benefits
We’ll have to wait and see what gets passed, but it’s likely that some new tax breaks will kick in for 2025.
What Should You Do Next?
These are just a few of the changes for 2025. If you want to know how these updates affect you, feel free to reach out. We’re happy to help!