2025 Changes

Every year I try to give an update as to what adjustments the IRS is making.? I find the sooner you know, the sooner you can start to plan accordingly.? Some of these items impact you, while others are nice to know.? In any case, why don’t we dive in and have some fun with numbers, shall we.

401(k) and 403(b) limits are going up.?

In 2025, the total employee contribution limit to a qualified 401(k) or 403(b) plan will increase from $23,000 to $23,500 in 2025 if under 50.? The over 50 catch-up contributions will stay the same at $7,500.? However, if you are age 60-63 by the end of 2025 you will be eligible for a total catch-up contribution up to an additional $11,250.

Total limit increase.?

The total amount of employee and employer contributions that can be invested into a 401(k) or 403(b) account is also increasing as one would imagine.? Under 50 goes from $69,000 to $70,000 while 50 or over increases to a total of $77,500.? Additionally, like above if in that 60-63 range you are eligible for a total of $81,250 total contribution.?

SEP IRA limits.

Pretty straight forward here, if you are contributing to a SEP IRA your limit goes up from $69,000 to $70,000 in 2025.

Traditional and Roth IRA limits.?

Sadly, no change here as they’ll remain at $7,000 or $8,000 if eligible for a catch-up.? Bummer, right?

H.S.A limits.?

You know how much I love the amazing health savings accounts.? Well, good news as those limits is increasing from $4,150 if single or $8,300 for family plans to $4,300 for individual and $8,550 for family plans.? There is no change to the over 55 $1,000 catch-up.

F.S.A limits–

The ugly sibling of H.S.A accounts in flexible savings accounts will increase $100 from $3,200 in 2024 to $3,300 in 2025.

SS COLA increase.

Social Security has also come out with their cost-of-living adjustment for collecting individuals.? Good news is inflation is down everywhere bad news is that means your benefits are increasing 2.57% next year.

Social Security Taxable Amounts.?

In 2025, you will be taxed for Social Security on your first $176,100 up from $168,600 in 2024.? This is the amount of income that you will see a deduction for Social Security before you get that nice little raise in your paycheck.?

Standard deduction going up.?

For those of you who take the standard deduction when filing your taxes, good news for you.? In 2025 you will have an increase of $400 for single and $800 for married filing jointly.? This means your standard deduction would be $15,000 and $30,000 respectively.?

Annual gift exclusions.?

For 2025 you can now gift $19,000 a person, up from $18,000, to as many people as you’d like without filing a gift tax return.

Lifetime estate tax credits.

In addition to the annual gift tax increase your estate tax credits per individual are increasing to a whopping $13,990,000 per person moving forward.

Total retirement account contributions–

In 2025 there will be an increase to the maximum income one can base a retirement contribution match on.? In 2024, the amount was $345,000 and now will be $350,000.?

Roth IRA phase out.?

For single filers in 2025, your Roth IRA phase-out amount will increase from $146,000 – $161,000 to $150,000- $165,000, and for married filing jointly a total of $230,000-$240,000 in 2024 to $236,000-$246,000 in 2025.? This is where you’ll start to lose Roth IRA eligibility.?

And plenty more…

These are the changes I thought most pressing to bring to your attention.? Certainly, this is far from a complete list of all changes, but our planning team or tax team is always here to help.? Please feel free to reach out to any of us to see how this impacts your personal financial situation.

As always stay wealthy, healthy, and happy.