2025 Tax Law Changes: What You Need to Know
2025 Tax Law Changes: What You Need to Know
At Middlebrook Wealth, our team is committed to keeping you informed about key financial updates that impact your retirement savings, taxes, and overall financial planning. As we step into 2025, several important tax law changes have been announced, affecting contribution limits for retirement accounts, standard deductions, Social Security, gifting, estate taxes, and Health Savings Accounts (HSAs). These updates present new opportunities to optimize your financial strategy and ensure you are making the most of available tax advantages.
Key 2025 Tax Law Updates
Retirement Account Contribution Limits for 2025
1. 401(k) Plans:
Employee Contribution Limit: Increased to $23,500 (up from $23,000 in 2024).
Catch-Up Contributions:
Ages 50 and Over: Additional $7,500, allowing a total contribution of $31,000.
Ages 60 to 63: A higher catch-up contribution limit of $11,250, permitting a total contribution of $34,750.
Combined Employee and Employer Contribution Limit: Increased to $70,000 (up from $69,000 in 2024)
2. Individual Retirement Accounts (IRAs):
Contribution Limit: Remains at $7,000.
Catch-Up Contribution (Ages 50 and Over): Remains at $1,000, for a total of $8,000.
3. Roth IRA Income Eligibility:
Single Filers: Full contribution allowed if Modified Adjusted Gross Income (MAGI) is less than $150,000; phase-out range between $150,000 and $165,000.
Married Filing Jointly: Full contribution allowed if MAGI is less than $236,000; phase-out range between $236,000 and $246,000.
Standard Deduction for 2025
Single Filers: Increased to $15,000 (up from $14,600 in 2024).
Married Filing Jointly: Increased to $30,000 (up from $29,200 in 2024).
Social Security Wage Base for 2025
Maximum Taxable Earnings: Increased to $176,100 (up from $168,600 in 2024).
Annual Gift Tax Exclusion for 2025
Per Recipient: Increased to $19,000 (up from $18,000 in 2024).
Estate and Gift Tax Exemption for 2025
Lifetime Exemption: Increased to $13.99 million per individual (up from $13.61 million in 2024).
Health Savings Account (HSA) Contribution Limits for 2025
Self-Only Coverage: Increased to $4,300 (up from $4,150 in 2024).
Family Coverage: Increased to $8,550 (up from $8,300 in 2024).
Catch-Up Contribution (Ages 55 and Over): Remains at $1,000.
How This Affects You
These updates may create new opportunities for tax-efficient investing, estate planning, and retirement savings strategies. Whether you're looking to maximize your retirement contributions, gift strategically, or plan for future tax liabilities, Middlebrook Wealth is here to help. If you have questions about how these changes impact your financial plan, reach out to our team.
