2025 Standard Deduction and Tax Rate

It won’t be long before you’ll be gathering every slip of paper and receipt you can find so you can step back into the ring with the IRS. The standard deduction and all tax brackets have been adjusted for the 2025 tax year. Here are the numbers that will be used to determine what you owe.

Standard Deduction

The standard deduction reduces a taxpayer’s taxable income by a flat dollar amount which is determined by the government. Beginning with the Tax Cuts and Jobs Act in 2017, the standard deduction was doubled for all classes of filers as an incentive for taxpayers not to itemize deductions. Today, almost 88% of taxpayers choose the standard deduction.

For the 2025 tax year the standard deduction for all taxpayers will be:

• $31,500 for those married filing jointly or surviving spouse
• $23,625 for head of household
• $15,750 for single or married filing separately

Seniors and blind taxpayers

There is an additional standard deduction for those 65 and older and an additional deduction for those 65 and blind. For 2025,

• Single or head of household individuals receive an additional $2,000 deduction.
• If the individual is also blind, they receive an additional $2,000 deduction (total of $4,000)
• Married spouses receive an additional $1,600 per person (total of $3,200) deduction.

For tax years 2025-2028 qualifying persons 65 years old and older receive an additional $6,000 per person as part of the 2025 Tax Act, also known as the One Big Beautiful Bill. You receive the deduction no matter whether you itemize deductions or take the standard deduction.

So, in 2025, a married couple where both individuals are 65 or older, receive total deductions of:

Standard deduction                  $31,500

Additional deduction                    3,200 ($1,600 x 2)

Senior Bonus                                12,000 ($6,000 x 2)

_______

TOTAL:                                          $46,500

You can find out more about the higher standard deduction for seniors and the blind in IRS Publication 501.

https://www.irs.gov/forms-pubs/about-publication-501

2025 tax brackets

Tax brackets are about taxable income—the amount after deductions and credits. Here are the 2025 tax brackets:

Married filing jointly and survivors

• Up to $23,850 – 10%
• $23,850-$96,950 -12%
• $96,950-$206,700 – 22%
• $206,700-$394,600 – 24%
• $394,600-$501,050 – 32%
• $501,050-$751,600 – 35%
• Above $751,600 – 37%

Head of Household

• Up to $17,000 – 10%
• $17,000-$64,850 – 12%
• $64,850-$103,350 – 22%
• $103,350-$197,300 – 24%
• $197,300-$250,500 – 32%
• $250,500-$626,350 – 35%
• $626,350 and above – 37%

Single

• Up to $11,925 – 10%
• $11,925-$48,475 – 12%
• $48,475-$103,350 – 22%
• $103,350-$197,300 – 24%
• $197,300-$250,525 – 32%
• $250,525-$626,350 – 35%
• Above $626,350 – 37%

Married filing separately

• Up to $11,925 – 10%
• $11,925-$48,475 – 12%
• $48,475-$103,350 – 22%
• $103,350-$197,300 – 24%
• $197,300-$250,525 – 32%
• $250,525-$375,800 – 35%
• Above $375,800 – 37%

Alternative Minimum Tax (AMT)

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. It requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer pays the higher of the two.

The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

The AMT exemption amount for 2025 is $88,100 for singles and $137,000 for married couples filing jointly. The 28% AMT rate applies to excess AMTI of $239,100 for all taxpayers, $119,550 for married couple filing separate returns.

Capital Gains

Long-term capital gains rates apply to investments held more than one year and are based on income and tax filing status.

Short-term capital gains taxes occur on profits for assets sold after being held for a year or less. Short-term capital gains tax rates can range from 10% to 37%, and are based on your tax bracket.

Happy filing!

Disclaimer:

This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors; all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investments at 1-888-777-0970 or email us at info@alhambrapartners.com.