Taxpayers will get higher standard deductions in 2025, IRS announces

Published On Oct 22, 2024, 1:01 PM

The IRS has announced that taxpayers will see an increase in the standard deduction for 2025. Single taxpayers and those married filing separately will have a standard deduction of $15,000 (up $400 from 2024), while couples filing jointly will see theirs rise to $30,000 (up $800). Heads of households will have a deduction of $22,500 (up $600). Moreover, income thresholds for all federal tax brackets are also rising. These adjustments reflect efforts to account for inflation, which has been decreasing recently, though key price pressures remain.

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Positive

The increase in standard deductions and adjustments to tax brackets may lead to an increase in disposable income for consumers, potentially boosting spending and economic growth. This could positively impact sectors like consumer goods and retail as more disposable income may lead to increased consumer spending. Companies in the consumer discretionary sector, such as those represented by the Consumer Discretionary Select Sector SPDR Fund (XLY) could benefit.

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