2025 Tax Filing Season Set to Begin on January 27: Expanded Tools and Key Updates for Taxpayers

The Internal Revenue Service (IRS) has announced that the 2025 tax season will begin on Monday, January 27, 2025. With over 140 million individual tax returns expected, the IRS is introducing expanded tools and resources to improve the taxpayer experience. The filing deadline for most taxpayers will be Tuesday, April 15, 2025. Taxpayers who rely on professionals for filing—more than half of filers—are encouraged to use trusted preparers to ensure accuracy and avoid scams.

This filing season introduces Direct File, an IRS program allowing eligible taxpayers to file federal returns for free directly through IRS systems. After a successful pilot in 12 states last year, the program will expand to 25 states in 2025. Enhancements include live chat support in both English and Spanish, data import features, and coverage for additional tax credits. Taxpayers can also use IRS Free File, which provides free guided tax software for those with an Adjusted Gross Income (AGI) of $84,000 or less, available exclusively at IRS.gov.

New for 2024: Key Tax Updates

The Inflation Reduction Act has reinstated the Hazardous Substance Superfund financing rate for crude oil received at U.S. refineries and petroleum products imported into the country. Starting in 2024, the rate will adjust for inflation, with a tax of $0.26 per barrel applied to crude oil and petroleum products entering after December 31, 2023.

Additional updates for the 2024 tax year, outlined in Revenue Procedure 2023-34, include significant changes in standard deductions, tax rates, and other key items:

Standard Deduction Increases

• Married couples filing jointly will see their standard deduction rise to $29,200, an increase of $1,500 from 2023.
• Single filers and married individuals filing separately will have a standard deduction of $14,600, up by $750.
• Heads of households will see an increase to $21,900, a rise of $1,100 from 2023.

Updated Tax Brackets

The top tax rate remains 37% for single taxpayers with incomes exceeding $609,350 and $731,200 for married couples filing jointly. Other marginal rates include:

• 35% for incomes over $243,725 (single) or $487,450 (married filing jointly).
• 32% for incomes over $191,950 (single) or $383,900 (married filing jointly).
• 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
• 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
• 12% for incomes over $11,600 ($23,200 for married couples filing jointly)

Expanded Credits and Benefits for Tax Year 2024

Taxpayers can take advantage of increases in key credits and benefits for the 2024 tax year:

• Earned Income Tax Credit (EITC): The maximum credit increases to $7,830 for taxpayers with three or more qualifying children, up from $7,430 in 2023.
• Fringe Benefits: Monthly limits for transportation and parking benefits rise to $315, an increase of $15 from 2023.
• Flexible Spending Arrangements (FSA): Contribution limits for health FSAs increase to $3,200, with a maximum carryover of $640.
• Medical Savings Accounts: For self-only coverage, the annual deductible range rises to $2,800–$4,150, and out-of-pocket maximums increase to $5,550. Family coverage deductibles and maximums also see increases.
• Adoption Credit: The maximum credit for adoption expenses rises to $16,810, up from $15,950 in 2023.

Other Notable Adjustments

The foreign earned income exclusion increases to $126,500, a $6,500 rise from the previous year. Estates of decedents who die in 2024 will have a basic exclusion amount of $13,610,000, compared to $12,920,000 in 2023. Similarly, the annual gift tax exclusion has increased to $18,000, up from $17,000 in 2023.

The Alternative Minimum Tax (AMT) exemption amount for 2024 is $85,700, with phaseouts beginning at $609,350 for single filers and $1,218,700 for married couples filing jointly. For comparison, the 2023 exemption amount was $81,300, with phaseouts starting at $578,150.