Many federal tax items are indexed annually for inflation, such as the income tax brackets for individuals and trusts, the standard deduction, the gift and estate tax exemption, and qualified charitable distribution (QCD) limits. The IRS recently announced what the new amounts will be for all 63 of these items in 2025. The new values will increase about 2.8% over the 2024 values they will replace. All of these changes are minor and should have little effect on the tax incentives that encourage donors to make charitable gifts.
The following new amounts will be of particular interest to gift planners, except perhaps the last one. For the detail on all 63 items, see Revenue Procedure 2024-40. For the changes in QCD limits, see IRS Notice 2024-80.
- QCD limits – The annual limit on qualified charitable distributions made outright to charity will increase $3,000 to $108,000. The limit on QCDs used to fund a gift annuity or charitable remainder trust in one year only will increase $1,000 to $54,000.
- Gift and estate tax exemption – The lifetime gift and estate tax exemption will increase $380,000 to $13,990,000 per person ($27,980,000 for married couples). This same exemption amount will apply to generation skipping tax.
- Annual gift tax exclusion – The annual gift tax exclusion will increase $1,000 to $19,000.
- Standard deduction – The standard deduction for married couples filing jointly will increase $800 to $30,000. For heads of households, it will increase $600 to $22,500. For married couples filing separately and single filers, it will increase $400 to $15,000. The upward adjustment for taxpayers who are 65 or older or blind will increase $50 to $1,600. It will increase $50 to $2,000 for taxpayers who are also unmarried and not a surviving spouse.
- Income tax bracket amounts – The amount at which each federal income tax bracket begins and ends will be slightly higher for trusts and for individuals. See below for the changes in these amounts for a married couple filing jointly.
- (And, in case you were wondering, the tax on arrow shafts will be $0.63 per arrow, a one cent increase.)
Federal Income Tax Schedule for Married Individuals Filing Jointly
| In 2024 |
In 2025 |
| Taxable Income |
Tax |
% on Excess |
Taxable Income |
Tax |
% on Excess |
| $0 |
$0 |
10 |
$0 |
$0 |
10 |
| 23,200 |
2,320 |
12 |
23,850 |
2,385 |
12 |
| 94,300 |
10,852 |
22 |
96,950 |
11,157 |
22 |
| 201,050 |
34,337 |
24 |
206,700 |
35,302 |
24 |
| 383,900 |
78,221 |
32 |
394,600 |
80,398 |
32 |
| 487,450 |
111,357 |
35 |
501,050 |
114,462 |
35 |
| 731,200 |
196,669.50 |
37 |
751,600 |
202,154.50 |
37 |