The IRS has announced several key updates for 2025 affecting various retirement accounts, health savings plans, Social Security, and tax provisions. Here’s a summary of the changes:
Retirement Account Contribution Limits:
- 401(k), 403(b), and Governmental 457 Plans: The contribution limit increases to $23,500, up from $23,000 in 2024.
- Catch-Up Contributions for Ages 50 and Over: Remain at $7,500, allowing a total contribution of up to $31,000.
- Special Catch-Up Contributions for Ages 60 to 63: Increase to $11,250, as per the SECURE 2.0 Act.
- Traditional and Roth IRAs: Contribution limits remain at $7,000, with a $1,000 catch-up contribution for those aged 50 and over.
- SEP IRA: Contribution limit increases to $70,000, up from $69,000 in 2024.
Income Phase-Out Ranges:
- Traditional IRA Deductibility:
- Single Filers Covered by a Workplace Plan: Phase-out range increases to $79,000–$89,000.
- Married Filing Jointly (Contributor Covered): Phase-out range increases to $126,000–$146,000.
- Married Filing Jointly (Contributor Not Covered, Spouse Covered): Phase-out range increases to $236,000–$246,000.
- Roth IRA Contributions:
- Single Filers and Heads of Household: Phase-out range increases to $150,000–$165,000.
- Married Filing Jointly: Phase-out range increases to $236,000–$246,000.
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs):
- HSA Contribution Limits:
- Individuals: Increase to $4,300, up from $4,150 in 2024.
- Families: Increase to $8,550, up from $8,300 in 2024.
- Catch-Up Contribution (Age 55 and Older): Remains at $1,000.
- FSA Contribution Limit: Increases to $3,300, up from $3,200 in 2024.
Social Security:
- Cost-of-Living Adjustment (COLA): A 2.5% increase in benefits for 2025.
- Taxable Income Threshold: Social Security tax applies to the first $176,100 of income, up from $168,600 in 2024.
Tax Provisions:
- Standard Deduction:
- Single Filers: Increases to $15,000, a $400 increase from 2024.
- Married Filing Jointly: Increases to $30,000, an $800 increase from 2024.
- Heads of Household: Increases to $22,500, a $600 increase from 2024.
- Annual Gift Tax Exclusion: Increases to $19,000 per recipient, up from $18,000 in 2024.
- Lifetime Estate Tax Exemption: Rises to $13.99 million per individual, up from $13.6 million in 2024.
- Retirement Contribution Base: Maximum income used to calculate retirement plan contributions increases to $350,000, up from $345,000 in 2024.
These adjustments are designed to account for inflation and provide enhanced opportunities for savings and tax planning. For more detailed information, you can refer to the official IRS announcements and trusted financial news sources.
-Phan Trần Hương-
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