In 2025, your paycheck may see a slight increase without a raise, all thanks to the IRS. The agency recently announced changes to various tax provisions that will affect 2025, with standard deductions rising by 2.7% and individual tax brackets shifting.
These changes are aimed at combating inflation, although they are smaller than in previous years. The adjustments made by the IRS can help prevent “bracket creep,” which is when inflation pushes you into a higher income tax bracket.
For example, if you are currently earning $101,000, the tax brackets in 2025 would mean you are taxed at 10% on the first $11,925, 12% on the income between that and $48,475, and 22% on the rest. These adjustments mean that despite inflation reducing your buying power, you may see less money withheld from your paycheck for federal taxes.
It’s important to note that the increase in your paycheck is not extra money but rather a way to offset inflation. Inflation has been down slightly in 2024 at 2.4%, which is an improvement from previous years.
While the changes may seem small, they can make a significant difference in your take-home pay. By keeping an eye on how tax provisions impact your paycheck, you can better plan for your financial future. Make sure to stay informed about any updates from the IRS and how they may affect your income.
