Tax Specialist: How Tax Brackets Work

How Tax Brackets Work

Tax brackets can be confusing for many American taxpayers. Especially when the IRS makes inflation adjustments, increasing or decreasing credits or deductions. A tax specialist can help you with all tax related questions and processes. Tax professionals can help you figure out which tax bracket you’re in and how to find the best credits or deductions.

What is a Tax Bracket?

A tax bracket determines what percentage of tax you’ll pay on different parts of your earnings. A progressive tax system, which is what we use in the U.S., determines higher tax rates for higher incomes.

Under the U.S. progressive system, all citizens pay identical tax rates on equal amounts of taxable income. This means that if you have a higher income, you are most likely going to be in a higher tax bracket. How you file your taxes—whether single, married (joint or separate), or as household head—can affect which tax bracket applies to you.

2025 Tax Brackets

The IRS updates the federal income tax brackets with inflation adjustments annually. The Internal Revenue Service makes these adjustments annually to ensure that taxpayers do not have to pay higher taxes due to inflation, the IRS may make adjustments to increase the value of various credits and deductions. Tax specialists can help you through these adjustments during your tax preparation and filing services.

Notable Changes from the IRS

  • Standard Deductions
    • The standard deduction for singles and separately filing married people will increase to $15,000.
    • Married couples who file together will get a higher standard deduction of $30,000.
    • Head of households will see the standard deduction increase to $22,500.
  • Marginal Rates
    • Singles earning above $626,350 and joint-filing couples making over $751,600 will continue facing the highest tax rate of 37%.
    • Single taxpayers with an income greater than $250,525 or married couples filing jointly with incomes greater than $501,050 will have a tax rate of 35%.
    • A tax rate of 32% will be in place for single taxpayers with incomes greater than $197,300 or $394,600 for married taxpayers filing jointly.
    • Singles earning more than $103,350 and joint-filing couples with income exceeding $206,700 will pay a 24% tax rate.
    • Single taxpayers with incomes more than $48,475 or married taxpayers filing jointly with a combined income greater than $96.950 will have a tax rate 22%.
    • A tax rate of 12% will be in place for single taxpayers with incomes more than $11,925 or $23,850 for married couples filing jointly.
    • Individual single taxpayers with an income equal to or less than $11,925 or married couples filing jointly with an income equal to or less than $23,850 will have a tax rate of 10%.
  • Alternative Minimum Tax Exemptions
    • Unmarried filers will see exemptions rise to $88,100, while married people filing separately get $68,650.
    • Couples who file taxes together will receive a higher exemption of $137,000.
  • Earned Income Tax Credits
    • Families with at least three eligible children might receive up to $8,046 through the Earned Income Tax Credit.
  • Qualified Transportation Fringe Benefit
    • The monthly cap for work-related transportation benefits and parking allowances will grow to $325.
  • Health Flexible Cafeteria Plans
    • Contributions to health flexible arrangements for employee salary reductions will increase to $3,300.
    • Flexible spending accounts allowing unused funds to roll over will now permit up to $660 to be carried forward.
  • Medical Savings Accounts
    • Individual health plan holders need deductibles between $2,850 and $4,300 annually.
    • The highest amount you might pay out-of-pocket for covered healthcare will rise to $5,700.
    • Family health plans require yearly deductibles ranging from $5,700 to $8,550.
    • Families won’t need to pay more than $10,500 in out-of-pocket healthcare costs.
  • Foreign Earned Income Exclusion
    • You can now exempt up to $130,000 of money made overseas.
  • Estate Tax Credits
    • For those who pass away in 2025, estates can exclude $13,990,000 from estate taxes.
  • Annual Exclusion for Gifts
    • You can give up to $19,000 per person yearly without paying gift taxes.
  • Adoption Credits
    • When adopting a special needs child, you may claim up to $17,280 in tax credits for eligible costs.
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How a Tax Specialist Can Help

A tax specialist can provide invaluable assistance when it comes to preparing and filing taxes, as well as navigating the complexities of tax brackets, deductions, and credits. They can help individuals and businesses assess their financial situation and determine the most advantageous tax strategies based on income and expenses.

By staying up-to-date with the latest tax laws and regulations, a tax specialist ensures that all eligible deductions and credits are maximized, potentially reducing the overall tax burden.

In the event of disputes or issues with the IRS, tax professionals can act as an advocate, negotiating directly with tax authorities to resolve matters such as audits, payment plans, or adjustments to tax filings, all while ensuring compliance with the law.

Hire a Tax Expert To Help You Prepare & File Your Taxes

Getting help from a tax expert this year is a wise choice for anyone wanting to handle their taxes correctly and with peace of mind. With their support, you can avoid costly mistakes, save time, and gain peace of mind knowing that you’re in compliance with current tax laws.

Whether you’re an individual, a small business owner, or dealing with more intricate financial situations, a tax specialist can provide the tailored guidance you need for a smooth and stress-free tax season.​​