The IRS has released the new tax brackets for 2025, and much of this information will be important to your donors.
Under current laws, many important tax items — such as the standard deduction — are now indexed for inflation. Each year, the Internal Revenue Service looks at the rate of inflation and adjusts several key numbers accordingly.
Importantly, for 2025 the Standard Deduction will rise to $30,000 for a married couple filing jointly, and $15,000 for a single individual. That means that if the taxpayer has deductions — such as charitable gifts, mortgage interest as well as state and local taxes — below that amount, they will take the standard deduction.
Taxpayers taking the standard deduction cannot deduct charitable gifts. In 2023, the Congressional Budget Office (CBO) estimates that around 87% of households took the standard deduction.
Also, The federal estate-tax exclusion amount—how much an individual can shelter from estate taxes—is $13.99 million for deaths in 2025, up from $13.61 million this year. (The deduction for a married couple will be twice that amount — or $27.98 million.) Individuals can make lifetime gifts, outright or in irrevocable trusts, up to that amount without incurring federal estate or gift tax.
A common estate planning strategy is to give assets up to the exclusion amount to your family, and give the rest to charity. With such a high threshold, very few households will leave a charitable bequest using this strategy.
Not all important tax items get inflation adjustments. The $10,000 cap for deducting state and local taxes, known as the SALT break, is not adjusted for inflation. This is an important limitation, because if that cap is removed many more households would have a much higher level of deductions and, therefore, would itemize. The CBO estimates that an additional 10% to 15% of all households (depending on the state they live in) would itemize if the $10,000 limit was removed.