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The
Internal Revenue Service detailed the increases in its annual
cost-of-living adjustments for pension plans and other
retirement accounts.
Workers who participate in 403(b) and the federal government’s
Thrift Savings Plan will also be able to increase their annual
contribution to $23,500 in 2025, up from $23,000 in 2024.
Some annual contributions remain the same. The limit on annual
contributions to an IRA will remain at $7,000 and the IRA
catch-up contribution limit for people 50 and over remains
$1,000 for 2025.
The agency last week announced increases to the standard
deduction in its annual inflation adjustments for 2025. For
single taxpayers and married individuals filing separately in
tax year 2025, the standard deduction is rising to $15,000 — up
$400 from 2024.
For couples who file jointly, that standard deduction will be
$30,000 for 2025, an $800 jump from the year prior. And heads of
households will get a $22,500 standard deduction, up $600 from
2024.
Income thresholds for all seven federal tax bracket levels were
also revised upward.
Last month, the Social Security Administration announced a 2.5%
cost-of-living increase for benefits recipients starting in
January. That translates to an average jump of more than $50 on
monthly checks for millions of people.
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