November 1, 2024

IRS boosts 401k contributions

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The IRS has announced an increase in the amount individuals can contribute to their 401k plans in 2025, with the limit raised to $23,500 from $23,000 in 2024.

Workers participating in 403b and the federal government’s Thrift Savings Plan can also increase their annual contribution to $23,500 in 2025, up from $23,000 in 2024.

The big picture: While some annual contributions remain the same, such as the limit on annual contributions to an IRA, which will remain at $7,000, the IRA catch-up contribution limit for individuals 50 and over remains $1,000 for 2025.

Additionally, the standard deduction for single taxpayers and married individuals filing separately in tax year 2025 will increase to $15,000, a $400 rise from 2024.
For couples filing jointly, the standard deduction will be $30,000 for 2025, an $800 increase from the previous year, and heads of households will receive a $22,500 standard deduction, up $600 from 2024.
Income thresholds for all seven federal tax bracket levels have been revised upward, and the Social Security Administration has also announced a 2.5% cost-of-living increase for benefits recipients starting in January 2025, resulting in an average jump of more than 5% on monthly checks for millions of people.

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