Key 2025 IRS Updates as of 01/27/25
The beginning of a new year is always a great time to evaluate and adjust your automated savings and retirement contributions. For 2025 increases to the allowable contribution limits and several IRS updates are now in effect. Here are some of the key 2025 IRS updates:
SEP IRA Contribution Limits
Contributing to a SEP IRA? The 2025 limit increases from $69,000 to $70,000.
HSA Contribution Limits
Health Savings Account (HSA) limits are increasing! In 2025, individuals can contribute up to $4,300 (up from $4,150), while families can contribute $8,550 (up from $8,300). The $1,000 catch-up for those 55 and older remains unchanged. These accounts are only available if you have an HSA eligible policy*.
Key Traditional and Roth IRA Contribution Limits
No changes here — contribution limits from traditional IRAs and Roth IRAs remain at $7,000 (or $8,000 for those eligible for catch-up contributions).
401(k) Contribution Limits for 2025
For 2025 the employee deferral limit is $23,50, and $70,000 for the combined employee and employer contributions. If you’re age 50 to 59 or 64 or older, you’re eligible for an additional $7,500 in catch-up contributions. An important note: Beginning in 2025, those between ages 60 and 63 will be eligible to contribute up to $11,250 as a catch-up contribution. This means, those 50 to 59 or 64 or older, will be able to contribute up to $31,000 in 2025 and those 60 to 63 will be able to contribute up to $34,750 in 2025.
Standard Deduction Increase
The standard deduction rises in 2025 to $15,000 for single filers (a $400 increase) and $30,000 for married couples filing jointly (an $800 increase).
Social Security COLA Increase
The cost-of-living adjustment (COLA) for Social Security benefits in 2025 is 2.5%.
Annual Gift Exclusion
The annual gift tax exclusion limit increases from $18,000 to $19,000 per recipient in 2025.
Roth IRA Phase-Out Range
For 2025, the Roth IRA income phase-out range increases to $150,000–$165,000 for single filers and $236,000–$246,000 for married filers (up from $146,000–$161,000 and $230,000–$240,000, respectively).
Information used in this commentary was obtained via these IRS links:
*https://www.irs.gov/pub/irs-drop/rp-24-25.pdf
https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000
https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
This report is provided as a courtesy for informational purposes only. The information has been obtained from sources we believe to be reliable; however, no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.