IRS sets new tax brackets, raises standard deduction for 2025

Published On Oct 22, 2024, 4:06 PM

The IRS has announced inflation adjustments for the 2025 tax year, raising tax brackets and standard deductions by approximately 2.75%. The standard deduction will increase to $15,000 for single filers and $30,000 for married couples filing jointly. These adjustments aim to mitigate "bracket creep," where taxpayers could otherwise be pushed into higher tax brackets due to inflationary increases in income without a real increase in purchasing power.

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The adjustments could lead to increased disposable income for taxpayers, potentially boosting consumer spending. Companies in the consumer discretionary sector might see positive impacts as spending increases. Additionally, an increase in the standard deduction may also lead to potential investments in tax-focused ETFs or funds targeting sectors that benefit from increased consumer spending.

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