Your take-home pay may have gotten a bump now that the Internal Revenue Service updated the income tax brackets and standard deduction for 2025. Depending on your income level, that means your paycheck might increase this year or your tax bill could decrease next year.
Even if your salary didn’t change, you might have dropped into a lower tax bracket in this year, effectively reducing your tax rate. That change could lead to a slight increase in the amount of you money you take home each pay period.
It’s normal for the IRS to make tax code changes each year to account for inflation. This helps prevent “tax bracket creep” — that’s when inflation pushes you into a higher tax bracket without a real increase in income.
These new tax changes went live on Jan. 1. Here’s everything you need to know about this year’s income tax brackets, the standard deduction increase and how tax changes could affect your money.
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How tax code changes affect your paycheck
When the IRS raises federal income tax brackets, you might fall into a different tax bracket than you did the year before — even if your income has stayed the same.
