IRS Announces 2025 Tax Inflation Adjustments

The adjustments affect 60 tax provisions, including health flexible spending plans; tax brackets all saw income threshold increases.

The IRS on Tuesday announced the annual inflation adjustment in 2025 for tax provisions, including employer-sponsored health flexible spending plans, also known as cafeteria plans.

The cafeteria plans, which allow employees to choose between multiple health benefits, will get a $100 bump to $3,300 in 2025 or for the 2026 tax-filing season. For cafeteria plans that permit carryover of unused amounts, the maximum carryover was raised by $20 to $660.

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Standard tax deductions also will rise. For single taxpayers and married individuals filing separately for 2025, the standard deduction will be $15,000, a $400 increase. For married couples filing jointly, the deduction is rising to $30,000, an increase of $800. The increases are less than the increases of $750 and $1,500, respectively, for the 2024 tax year.

Inflation has stabilized over the past year after the Federal Reserve’s interest rate hikes took hold. The IRS makes annual inflation adjustments to more than 60 tax provisions depending on inflation, based on Revenue Procedure 2024-40.

Other areas that will increase included:

  • For taxpayers with at least three qualifying children, the 2025 maximum earned income tax credit is $8,046, an increase of $216 from 2024;
  • The monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking will rise $10 to $325;
  • Medical savings accounts for participants covering only themselves will see a deductible of at least $2,850, $50 more than last year, and no more than $4,300, an increase of $150. The maximum out-of-pocket expense amount rises $200 to $5,700. For family coverage, the deductible is not less than $5,700, a $150 increase, and no more than $8,550, an increase of $200. Out-of-pocket expenses for family coverage is $10,500, an increase of $300 from 2024;
  • Estates of decedents who die during 2025 will have an exclusion amount of $13.99 million, an increase of $380,000; and
  • The annual exclusion for gifts jumps to $19,000, up by $1,000, from 2024.

Marginal Tax Rate

The marginal tax rates remained the same in terms of percent of payment, though the income threshold for those rates increased across brackets. The end result is:

  • 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly);
  • 35% for incomes greater than $250,525 ($501,050 for married couples filing jointly);
  • 32% for incomes greater than $197,300 ($394,600 for married couples filing jointly);
  • 24% for incomes greater than $103,350 ($206,700 for married couples filing jointly);
  • 22% for incomes greater than $48,475 ($96,950 for married couples filing jointly);
  • 12% for incomes greater than $11,925 ($23,850 for married couples filing jointly); and
  • 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

Some tax provisions that were unchanged include: personal exemptions, which remain at 0 after being eliminated in the Tax Cuts and Jobs Act of 2017; no limitations on itemized deductions; and the same level for lifetime learning credits that has been in place since December 31, 2020.

Steinmeier Named LPL’s CEO, Replacing Ousted Arnold

LPL analyst predictions hold true, as Interim CEO Steinmeier earns the top job less than one month after the firm’s CEO was fired for misconduct.

Rich Steinmeier

LPL Financial Holdings Inc. on Monday named Rich Steinmeier CEO and member of the company’s board of directors after he had taken the CEO role on an interim basis October 1.

Steinmeier replaced Dan Arnold, who was ousted by LPL’s board for making statements to employees that violated the firm’s code of conduct; the firm has not commented further on his specific actions.

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The board also promoted Chief Financial Officer Matthew Audette to also hold the role of president, a title Arnold had previously held alongside his CEO title.

The moves were widely anticipated by LPL analysts, who had noted in particular Steinmeier’s track record of doubling organic business growth at the firm since he joined in 2018. They also anticipated the elevation of Audette, who had worked with Steinmeier for years.

“Rich’s appointment to CEO, which reflects the Board’s succession plan, is a testament to the valuable contributions he has made during his tenure with LPL and the trusted relationships he has established with clients and employees,” Jim Putnam, chair of LPL’s board, said in a statement.

Before joining LPL, Steinmeier had leadership roles at UBS Financial and Merrill Lynch. Prior to that, he worked as a consultant for McKinsey & Co.

Audette has been LPL’s CFO since 2015 and took over business operations in 2023. Prior to LPL, he was executive vice president and CFO of E*Trade.

LPL’s network includes 23,000 financial advisers working with both individuals and employer-sponsored retirement plans.

LPL’s board did not reward Arnold with severance benefits upon terminating his employment, but it left open the possibility that he could receive some of his equity awards from the company should the parties reach a settlement, according to a filing with the Securities and Exchange Commission.

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