IRS Reveals New Tax Rates, Deductions for 2025

The annual exclusion for gifts increases to $19,000 for calendar year 2025, rising from $18,000.

Health Care Plan Amounts

For the taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,300, increasing from $3,200 in tax year 2024.

For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $660, increasing from $640 in tax year 2024.

For participants who have self-only coverage, their plan must have an annual deductible that is not less than $2,850 (a $50 increase from the previous tax year), but not more than $4,300 (an increase of $150 from the previous tax year). The maximum out-of-pocket expense amount rises to $5,700, increasing from $5,550 in tax year 2024.

For family coverage in tax year 2025, the annual deductible is not less than $5,700, increasing from $5,550 in tax year 2024; however, the deductible cannot be more than $8,550, which is an increase of $200 versus the limit for tax year 2024.

For family coverage, the out-of-pocket expense limit is $10,500 for tax year 2025, rising from $10,200 in tax year 2024.

Unchanged for Tax Year 2025

By statute, certain items that were indexed for inflation in the past are currently not adjusted.

For example, the personal exemptions for tax year 2025 remain at $0, as in tax year 2024. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017.

There is no limitation on itemized deductions for tax year 2025, as in tax year 2024 and preceding, to tax year 2018. The limitation on itemized deductions was likewise eliminated by the Tax Cuts and Jobs Act of 2017.