May Newsletter
New Tax Brackets and Rates for 2025 - What You Need to Know!
In late 2024 the IRS Released the updated tax brackets, effective for the 2025 tax year. These adjustments are designed to help combat inflation, increase income thresholds for each tax bracket and raise the standard deduction.
For single filers, the standard deduction jumps to $15,000 (from $14,600 in 2024), while married couples filing jointly see it rise to $30,000 (from $29,200). This shift helps prevent "bracket creep," where inflation pushes taxpayers into higher brackets without real income growth.
The marginal tax rates—ranging from 10% to 37%—remain unchanged, but the income levels for each bracket have increased. For instance, the 22% bracket now applies to single filers earning over $48,475 (up from $46,700) and joint filers over $96,950 (up from $93,400). The top 37% rate kicks in at $626,350 for individuals and $751,600 for couples. Additionally, contribution limits for health savings accounts (HSAs) rise to $4,300 for individuals and $8,550 for families, while flexible spending accounts (FSAs) increase to $3,300.
These updates, part of over 60 inflation-adjusted provisions, offer opportunities for tax planning. Taxpayers should review these changes to optimize their 2025 filings.
Updates to Accounting Standards – What Businesses Need to Know
In April 2025, the Financial Accounting Standards Board (FASB) announced some important updates to U.S. accounting rules (known as GAAP), especially for private companies. These updates take effect for financial years that begin after December 15, 2025.
One major change focuses on how companies report their income taxes. They’ll now need to give more detailed information about their tax expenses, future tax benefits or costs (called deferred taxes), and how their actual tax rate compares to the expected rate. This helps investors and other stakeholders better understand a company’s tax situation.
Another update deals with how companies report "profits interests"—a type of stock-based compensation—making sure everyone follows the same rules and reports these consistently.
There’s also new guidance for businesses forming joint ventures starting in 2025. The assets and debts involved in setting up these partnerships now have to be recorded at their current market value. This makes financial reports more accurate and easier to compare.
If your business has a financial year starting in 2026, now’s the time to review these changes and update your accounting practices.
