It’s that time of year again. Your favorite governmental agency, the IRS, has released its new tax rates to adjust for inflation. Right in time to give you a scare with Halloween.
Why do new tax rates matter?
Tax rates reflect the amount of taxes you will owe.
With new tax rates, it may be in your best interest to plan ahead and better prepare yourself.
Here are the new marginal rates:
For tax year 2025:
The top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
35% for incomes over $250,525 ($501,050 for married couples filing jointly).
32% for incomes over $197,300 ($394,600 for married couples filing jointly).
24% for incomes over $103,350 ($206,700 for married couples filing jointly).
22% for incomes over $48,475 ($96,950 for married couples filing jointly).
12% for incomes over $11,925 ($23,850 for married couples filing jointly).
10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
To read more about the updated 2025 tax year IRS details, please click here.
Although these numbers do not reflect the implications you will have for your 2024 tax liability, it reminds us of tax season in general, and what is in your best interest to do before 2024 ends.
101 Advice: Planning Ahead Before 2024 Ends
For individuals receiving a W2, it would be a good idea to check your pay stubs and ensure that your employer’s payroll provider is deducting the right amount of taxes. You’d be surprised, but we see errors in this frequently. If the right amount is not deducted, it could be the reason you may owe more taxes while you file your return. The amount may shock you, so it’s better to double check. If you need help, please speak 1:1 with your tax preparer.
However, although it’s good to make those corrects to your W2 as soon as possible, it likely won’t drastically change your liability (or refund) this late in the year. If enough has not been deducted, your tax preparer will calculate how much extra you are predicted to owe while filing your 2024 taxes. You may consider submitting an estimated tax payment to avoid penalties.
If you are a business owner, planning ahead is imperative as you have the power to change your fate (at least a little). This is the time of year where every business owner should have a 1:1 with their accountant, analyze their company’s bottom line profit and plan what to do to combat their tax liability before the year ends.
Besides the option of paying estimated tax vouchers, perhaps this is a good time to consider bonuses to add to your payroll, asset acquisitions and other large purchases such as a car/truck, computer/laptop, printer, etc. Decreasing your bottom line will decrease your tax liability so if you wanted to make some purchases for your business and have been holding off the whole year, try to get them in before it’s too late.
Once the year ends, you can’t do much to change the numbers and your ultimate tax fate. (Unless you had a time machine.)
So instead of getting frustrated during tax season, we recommend planning ahead and being proactive about what you can do to decrease your tax liability.
Need help with a professional? Contact us today and an expert will get in touch with you shortly.