The IRS raised tax brackets for 2025 based on inflation. This means that the amount of income you can earn before you have to pay taxes will increase in 2025. The IRS adjusts tax brackets each year to account for inflation, which is the rate at which prices for goods and services increase over time.
The increase in tax brackets is important because it helps to ensure that taxpayers are not paying more taxes simply because the cost of living has gone up. For example, if your income stays the same but the cost of living increases by 3%, your real income (the amount of goods and services you can buy with your income) will decrease by 3%. If the tax brackets were not adjusted, you would end up paying more taxes on your lower real income.
