Lower Tax Rates May Remain Beyond 2025
• 3 min read
- Brief: Taxes
Potential for extension of favorable rates in Tax Cuts and Jobs Act of 2017.
Get the Latest Research & Insights
Sign up to receive an email summary of new articles posted to AMG Research & Insights.
The election outcome has raised the possibility that the lower tax rates in the Tax Cuts and Jobs Act of 2017—set to expire at the end of 2025—may be extended or perhaps lowered further.
In addition, although inflation has eased it continues to impact taxpayers in a number of ways, including through annual adjustments made by the Internal Revenue Service to numerous contribution, threshold, and exemption amounts.
Annualized core Consumer Price Index inflation was at 3.3% in October 2024 versus 4.0% in the same period a year ago. Lower annual adjustments mean more of your income could fall into a lower tax bracket.
Given the long-term fiscal imbalances in the U.S., tax policies tend to change. Therefore, now may be the time to consider tax-shifting strategies that favor you today.
Examples Of Tax-Year Shifting Strategies
- Depending on your expected income for the coming year, you may decide to defer income by having year-end bonuses or deferred compensation awards paid in 2025.
- Consider whether to harvest capital losses in investment accounts to offset any capital gains and perhaps even create a tax-loss carry forward for future years.
- You could pre-pay property tax bills for 2025 in this calendar year to increase 2024 deductions.
- Consider bunching future planned charitable contributions in this calendar year by making a lump-sum gift to a donor-advised fund.
- Energy credits for electric vehicles (EV) and home efficiencies that have been available since 2023 could be on the chopping block in 2025. Consider moving ahead on purchasing an EV or—for your home—looking at windows, insulation, an air conditioner, water heater, heat pump or other items that qualify for the credit.
- “Superfund” a 529 plan to fund education for children or grandchildren by pulling forward the next five years of contributions into this calendar year.
- Utilize the current historically high lifetime estate and gift exemption to your estate planning advantage before it potentially reverts to a lower amount in 2026.
Contribution, Threshold and Exemption Amounts
The following tables, sourced from the IRS, include helpful information on deferred accounts and exemptions that we find clients ask for frequently.
Federal Income Tax Brackets: 2024-2025
| TAX RATE | SINGLE | HEADS OF HOUSEHOLD | MARRIED FILING JOINTLY | |||
|---|---|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | |
| 37% | $609,351 or more | $626,351 or more | $609,351 or more | $626,351 or more | $731,201 or more | $751,601 or more |
| 35% | $243,726 to $609,350 | $250,526 to $626,350 | $243,701 to $609,350 | $250,501 to $626,350 | $487,451 to $731,200 | $501,051 to $751,600 |
| 32% | $191,951 to $243,725 | $197,301 to $250,525 | $191,951 to $243,700 | $197,301 to $250,500 | $383,901 to $487,450 | $394,601 to $501,050 |
| 24% | $100,526 to $191,950 | $103,351 to $197,300 | $100,501 to $191,950 | $103,351 to $197,300 | $201,051 to $383,900 | $206,701 to $394,600 |
| 22% | $47,151 to $100,525 | $48,476 to $103,350 | $63,101 to $100,500 | $64,851 to $103,350 | $94,301 to $201,050 | $96,951 to $206,700 |
| 12% | $11,601 to $47,150 | $11,926 to $48,475 | $16,551 to $63,100 | $17,001 to $64,850 | $23,201 to $94,300 | $23,851 to $96,950 |
| 10% | Up to $11,600 | Up to $11,925 | Up to $16,550 | Up to $17,000 | Up to $23,200 | Up to $23,850 |
Individual Retirement Account (IRA) and Retirement Plan Contribution Limits: 2024-2025
| RETIREMENT PLAN | AMOUNT OF ANNUAL CONTRIBUTIONS/ELECTIVE DEFERRALS | CATCH-UP CONTRIBUTIONS (if attain age 50 by end of year) |
||
|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | |
| IRAs—Traditional & Roth | $7,000 | $7,000 | $1,000 | $1,000 |
| 401(k) | $23,000 | $23,500 | $7,500, if plan allows | $7,500, if plan allows* |
| SIMPLE | $16,000 | $16,500 | $3,500, if plan allows | $3,500, if plan allows** |
*Catch-up contribution is $11,250 for employees ages 60 to 63 by end of year.
**In some plans, catch-up contribution can be $3,850 for employees age 50 or older; for employees ages 60 to 63 by end of year, it is $5,250.
Individual Retirement Account (IRA) and Retirement Plan Deadlines: 2024-2025
RETIREMENT PLAN ESTABLISHMENT DATE FUNDING DATE
IRAs—Traditional & Roth By date that income tax returns are filed, no later than April 15 By date that income tax returns are filed, no later than April 15
Simplified Employee Pension (SEP) By date that income tax returns are filed, including time of extension By date that income tax returns are due, including time of extension
SIMPLE By October 1 of current tax year By date that income tax returns are due, including time of extension
Self-employed retirement plans (defined benefit and solo 401(k) plans) By date that income tax returns are filed, including time of extension By date that income tax returns are due, including time of extension
Federal Tax Threshold Amounts and Standard Deductions: 2024-2025
| FILING STATUS | SINGLE | MARRIED FILING JOINTLY | TRUSTS & ESTATES | |||
|---|---|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | |
| 37% Ordinary Income Rate* | $609,350 | $626,350 | $731,200 | $751,600 | $15,200 | $15,560 |
| 20% Long-term Capital Gain Rate* | $518,900 | $533,400 | $583,750 | $600,050 | $15,450 | $15,650 |
| 0% Long-term Capital Gain Rate* | $47,025 | $48,350 | $94,050 | $96,700 | $3,150 | $3,150 |
| 3.8% Medicare Surtax** | $200,000 | $200,000 | $250,000 | $250,000 | $15,200 | N/A |
| 0.9% Medicare Contribution Tax*** | $200,000 | $200,000 | $250,000 | $250,000 | N/A | N/A |
| Standard Deduction | $14,600 | $15,000 | $29,200 | $30,000 | N/A | N/A |
| Additional Deduction if Age 65 or Blind | $1,950 | $2,000 | $1,550 | $1,600 | N/A | N/A |
| 199A (Qualified Business Income Deduction) Threshold Limit | $191,950 | $197,300 | $383,900 | $394,600 | $191,950 | $197,300 |
| 199A (Qualified Business Income Deduction) Threshold Limit Phased Out | $241,950 | $247,300 | $483,900 | $494,600 | $241,950 | $247,300 |
**Based on modified AGI (AGI plus net foreign earned income exclusion); not inflation adjusted.
***Based on earned income; not inflation adjusted.
Alternative Minimum Tax Exemptions (AMT) and Rates: 2024-2025
| AMT EXEMPTION | AMT RATE ON AMT INCOME | ||||||
|---|---|---|---|---|---|---|---|
| Filing Status | 2024 | 2024 Phase-Out | 2025 | 2025 Phase-Out | Rate | 2024 | 2025 |
| Single | $85,700 | $609,350 – $952,150 | $88,100 | $626,350 – $978,750 | 26% | Up to $232,600 | Up to $239,100 |
| Married Filing Jointly | $133,300 | $1,218,700 – $1,751,900 | $137,000 | $1,252,700 – $1,800,700 | 28% | Over $232,600 | Over $239,100 |
Kiddie Tax Threshold: 2024-2025
| 2024 | 2025 | |
|---|---|---|
| No Tax on Initial Level of Unearned Income Up to | $1,300 | $1,350 |
| Tax at Child’s Rate on Next Level of Unearned Income | $1,300 | $1,350 |
| Total Kiddie Tax Threshold | $2,600 | $2,700 |
Federal Estate, Gift, and GST Exemptions: 2024-2025
| 2024 | 2025 | ||||||
|---|---|---|---|---|---|---|---|
| Annual Gift Tax Exclusion | Lifetime Gift Tax Exemption | Estate Tax Exemption | GST Tax Exemption | Annual Gift Tax Exclusion | Lifetime Gift Tax Exemption | Estate Tax Exemption | GST Tax Exemption |
| $18,000 | $13.61 million | $13.61 million | $13.61 million | $19,000 | $13.99 million | $13.99 million | $13.99 million |
Health Account Contribution Limits: 2024-2025
| TYPE OF ACCOUNT | 2024 | 2025 |
|---|---|---|
| Flexible Spending Account (FSA) | $3,200 | $3,300 |
| Health Savings Account (HSA)—Individual | $4,150 | $4,300 |
| Health Savings Account (HSA)—Family | $8,300 | $8,550 |
| HSA Additional Contributions for those age 55+ | $1,000 | $1,000 |
Long-Term Care Insurance—Eligible Premium Amounts: 2024-2025
| POLICYHOLDER’S AGE | 2024 | 2025 |
|---|---|---|
| Age 40 or younger | $470 | $480 |
| Age 41 to age 50 | $870 | $900 |
| Age 51 to age 60 | $1,760 | $1,800 |
| Age 61 to age 70 | $4,710 | $4,810 |
| Age 71 or older | $5,880 | $6,020 |
Charitable Contribution Deductions: 2024-2025
| PUBLIC CHARITIES | PRIVATE FOUNDATIONS | |
|---|---|---|
| Cash Donations | 60% of AGI limitation (50% before Tax Cut and Jobs Act of 2017) | 30% of AGI limitation |
| Appreciated Property Donations | Fair market value (FMV) of long-term capital gain property is deductible only up to 30% of AGI limitation | Basis of long-term capital gain property is deductible only up to 20% of AGI limitation. FMV deduction for publicly traded stock |
Plan to Your Unique Circumstances
At AMG, we plan comprehensively, counseling each client on their unique circumstances, needs, and desires. Because of the clarity gained through our proprietary Financial Security Analysis, integrated tax projections and cash flow analyses, clients can make prompt and informed decisions and know that AMG can implement them with confidence.
HOW AMG CAN HELP
Not a client? Find out more about AMG’s Tax Services or to book a free consultation call 303-486-1475 or email us the best day and time to reach you.
This information is for general information use only. It is not tailored to any specific situation, is not intended to be investment, tax, financial, legal, or other advice and should not be relied on as such. AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.
Get the latest in Research & Insights
Sign up to receive a weekly email summary of new articles posted to AMG Research & Insights.