Comprehensive Key Numbers

<p>Comprehensive Key Numbers</p>

These days when we talk about inflation, we likely discuss how much more we have been paying for food and gasoline. But inflation also should factor into our tax and financial planning for 2025. The Internal Revenue Service has announced the 2025 inflation adjustments for more than 60 tax provisions, including tax rate schedules and other tax changes. There have also been cost-of-living adjustments for 2025 to Social Security, Medicare, and Medicaid.

Key Takeaways

Here are a few of the major changes that could be beneficial to you: 

  • Each year, the IRS announces annual inflation adjustments to more than 60 tax provisions that will impact taxpayers when they file their returns in 2026.  Details are in Revenue Procedure 2024-40.
  • Each year the Internal Revenue Service announces cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for the coming tax year. For 2025, details are in Notice 2024-80, posted on IRS.gov.
  • The Social Security Administration released adjustments to benefits and other automatic increases for cost-of-living adjustments (COLAs) to take effect in January. Medicare Part B & D changes each year and are also effective in January.
  • Expanded limits on retirement savings accounts: The elective deferral limit for 401(k) plans, 403(b) plans, and 457(b) plans increase for 2025 to $23,500, up from $23,000 for 2024. The limit on annual contributions to a Traditional or Roth IRA remain at $7,000.
  • Increased standard deduction: The standard deduction for married couples filing jointly for tax year 2025 rises to $30,000, an increase of $800 from tax year 2024. For single taxpayers, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024.
  • Higher alternative minimum exemption and phase-out limits: For 2025, the tax exemption amount for unmarried individuals increases to $88,200 and begins to phase out at $626,350 ($137,000 for married couples filing jointly for whom the exemption begins to phase out at $1,252,700). For comparison, the 2024 exemption amount was $85,000 and began to phase out at $609,350 ($133,300 for married couples filing jointly for whom the exemption began to phase out at $1,218,700).
  • Increased estate and gift tax exemptions: For decedents who die during 2025, the basic lifetime exemption for estate, gift, and generation-skipping transfer tax increases to $13,990,000 from $13,610,000 for decedents who died in 2024. That limit is scheduled to be halved by 2026.
  • Increased annual exclusion for gifts: The exclusion increases to $19,000 for calendar year 2025, up from $18,000 for calendar year 2024.

These are just a handful of potential savings opportunities. By using the information in this report and consulting with your tax advisor, you can begin planning now.

Summarized Report Full Report

The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).

Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.

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KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.

The summaries, prices, quotes, and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.

Investment products, brokerage and investment advisory services are offered through KIS, member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KIA. Insurance products offered through KIA are underwritten by and the obligation of insurance companies that are not affiliated with KeyBank. 

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