As you enter 2025 with wages similar to those in 2024, your take-home pay may slightly increase due to changes in tax brackets and the standard deduction, despite potential economic challenges. Tax expert Long notes that if your salary remains stable while tax brackets rise, you could find yourself in a lower tax tier. For 2025, the standard deduction will increase significantly to $30,000 for married couples filing jointly (up from $29,200 in 2024) and to $15,000 for single filers (up from $14,600). This could mean that even a slight income increase may result in paying less tax than in 2024.
However, financial advisor Sheneya Wilson points out that many Americans may not feel the benefits of this potential pay increase due to persistent inflation in areas such as groceries, gasoline, and car prices. Therefore, any increase in take-home pay could be offset by rising costs. It’s crucial for individuals to monitor their federal and state tax withholdings, especially during significant life or income changes, to ensure they are neither over- nor under-withholding taxes, which could lead to refunds or owed taxes at year-end.
