2025 federal tax brackets and income rates

How much you owe the IRS at tax time is determined by the tax brackets you're eligible for. For tax year 2025 (filing in 2026), there are seven brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Each year, the IRS adjusts the income range for each bracket to account for inflation's impact on salaries. Depending on your income and filing status, your earnings will likely fall into multiple brackets.

Find out the income ranges for tax brackets in tax year 2025 and how you can lower your taxable income.

Thanks to the Tax Cuts and Jobs Act of 2017 (TCJA), the brackets for tax year 2025 remain the same as they were in 2024. However, the IRS increased the income thresholds for each tier by 2.8%.

There are again seven brackets for tax year 2026. The maximum 37% rate applies only to individual filers earning over $640,600 and to married couples filing jointly who made over $768,700 combined.

Because the IRS utilizes progressive rates, few people fall into a single tax bracket. If you're an individual filer who earned $45,000 in taxable income in 2025, for example, the amount you owe will be broken into two tax brackets:

• 10% for the first $11,925
• 12% for income between $11,926 and $48,475

There are several strategies to lower your tax rate that don't involve a pay cut. Some require itemizing, however. In 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples.

1. Claim tax credits

Tax credits reduce the amount you owe, providing a dollar-for-dollar decrease in your tax liability. If you owe $2,000 in taxes and qualify for a $500 tax credit, for example, your tax liability is reduced to $1,500.

You can learn about tax credits you may be eligible for on the IRS website, including:

• The Earned Income Tax Credit: If you earned less than $61,555 (or $68,675 if married and filing jointly), you can earn up to $8,046 based on your income and family size
• Child Tax Credit: Worth up to $1,700 per qualifying dependent child, depending on your modified adjusted gross income.
• Child and Dependent Care Tax Credit: Claim up to 35% of daycare, dependent care and related expenses, up to $3,000 (or up to $6,000 for two or more children).
• American Opportunity Tax Credit: If you earn $80,000 or less ($160,000 or less if married filing jointly) you can claim $2,500 for qualified tuition costs, school fees, and course materials.

2. Deduct student loan interest

While tax credits directly reduce your tax bill, tax deductions lower your taxable income by letting you subtract certain expenses.

If you, your spouse, or a dependent has federal or private student loans, for example, you can deduct up to $2,500 in student loan interest each year. This write-off begins to phase out if your modified adjusted gross income hits $70,000, however, and disappears entirely at $90,000.

If you're married and filing jointly, the phaseout starts at $155,000 and disappears if you earn $185,000 or more.

3. Max out your retirement accounts

You can also claim deductions for contributions to qualifying pre-tax retirement accounts like an employer-sponsored 401(k) or traditional IRA.

With pre-tax contributions, you're taking less out of your paycheck now. However, because your money is growing tax-deferred, you'll pay income tax on it when you start withdrawing.

4. Contribute to a Health Savings Account

If you have a high-deductible healthcare plan, a Health Savings Account (HSA) allows you to save for upcoming medical expenses. Contributions are tax-free (or tax-deductible if self-funded) and the balance can grow tax-free through investments. Withdrawals are also tax-free if used for eligible expenses — like deductibles or copays, prescriptions, medical devices and even birth control.

Some companies also offer flexible spending accounts (FSA), which lower your taxable income by allowing pre-tax contributions. FSAs don't let you invest, however, and the funds generally don't roll over to the following year.

5. Sell losing stocks

If you own stocks that performed badly this year, you can use your losses to offset the taxes you would pay on other investment gains — a process called tax-loss harvesting.

If you have no capital gains this year, your losses can offset up to $3,000 of ordinary income — anything beyond that can carry over and be used to lower taxes. in the future.

There are many free and paid options for filing online. Based on cost, features and customer reviews, TurboTax and H&R Block both top our list of the best tax prep software.

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