As you plan for 2025, here are some of the important tax numbers to keep in mind.
1. Gift Tax Annual Exclusion (2025)
The annual gift tax exclusion increased again for 2025, to $19,000. This allows you to give more to children, grandchildren, and others without filing a gift tax return.
2. Increased Standard Deduction and Enhanced Deduction for Age 65+
There are two key layers here:
- The standard deduction for tax year 2025 (before age-65 bonus) increased to:
- $15,750 for single or married filing separately.
- $31,500 for married filing jointly.
- $23,625 for head of household.
- For taxpayers age 65 or older (or blind), additional standard-deduction amounts for 2025:
- $2,000 extra for a single or head of household filer.
- $1,600 extra per qualifying spouse for married filing jointly or married filing separately.
- Bonus senior deduction: Starting in 2025 (and through 2028) individuals age 65+ may claim an extra deduction of $6,000 (per qualifying older adult) in addition to the standard and extra standard deduction.
- Phase-out: That $6,000 bonus deduction begins to phase out when Modified Adjusted Gross Income (MAGI) exceeds:
- $75,000 for single filers.
- $150,000 for married couples filing jointly.
Why this matters:
For seniors, the combined effect of the larger standard deduction + age-65 extra + the $6,000 bonus can significantly reduce taxable income. It opens a window to consider strategies such as a Roth conversion or realizing long-term capital gains at favorable rates.
3. Increased SALT Deduction Limit
Beginning in 2025, the deduction cap for state and local taxes (SALT) is higher (for many filers) thanks to recent legislation.
- While older law capped SALT at $10,000, newer rules raise that limit up to $40,000 for individual filers under certain income thresholds (and $20,000 for married filing separately) for tax years 2025-2029.
- There may still be phase-downs for higher-income taxpayers.
Why this matters:
If you are in higher-tax states or paying large property/state taxes you should revisit whether itemizing now makes more sense than taking the standard deduction.
4. Increased Contribution Limits for Retirement Plans
- For a typical workplace plan such as a 401(k), 403(b) or 457 plan: the employee salary-deferral limit is $23,500 for tax year 2025.
- Catch-up contributions (for age 50+) remain at $7,500 for 2025 in most cases.
- For individuals aged 60-63, some plans may allow a larger “higher catch-up” contribution of $11,250 in 2025.
- For traditional IRAs & Roth IRAs: the base contribution limit is $7,000 for 2025 ($8,000 for taxpayers age 50+).
Why it matters:
With higher limits, you have more room to contribute tax-advantaged dollars in 2025.
In our recent 'Year-End Reminders' webinar, our advisors dove deeper into some different considerations as you prepare for the upcoming tax season. Check out the webinar for more insight as we launch into 2026!