October 28, 2024

As we approach 2025, it’s crucial to be aware of the upcoming changes in tax brackets. Every year, the IRS adjusts tax brackets to account for inflation and other economic factors. For individuals and families planning their finances, understanding these changes is vital.

What are Tax Brackets?

Tax brackets are ranges of income that determine the percentage of federal income tax you pay. As your income increases, so does your tax rate. These brackets aim to ensure that higher earners contribute more in taxes, while lower earners are taxed at lower rates.

Key Changes to Expect in 2025

The IRS has announced adjustments to the tax brackets for 2025 to keep pace with inflation. This means that the income thresholds for each tax rate may shift slightly, which could affect your overall tax liability. If you earn more than the new bracket limits, you could find yourself paying a higher percentage of your income in taxes.

For example, if the 22% tax bracket threshold moves from $89,450 to $91,000, and you earn just over that limit, your tax rate for that portion of your income will increase.

Why Do These Changes Matter?

For those engaged in wealth management or tax planning, staying informed about these updates is crucial. The changes in tax brackets can impact how much you owe, your savings strategy, and even the timing of income. By planning ahead, you can better manage your finances and minimize your tax liability.

To explore these updates in greater detail, visit the original Wall Street Journal article here.

How Can We Help?

Be sure to download our free year-end tax planning guide here:

At Omni360, we specialize in helping clients navigate the complexities of tax planning and wealth management. If you have questions about the 2025 tax brackets or would like to discuss strategies for optimizing your financial plans, reach out to our team for personalized advice.