IRS Roundup: 2025 Tax Brackets, 401(k) Contributions, and FSA Limits

The IRS has announced key updates for the 2025 tax year, including adjustments to tax brackets, 401(k) contribution limits, and FSA maximums. These changes, influenced by inflation, affect taxpayers' contributions and withholdings. Read on to learn about the updated figures you’ll need to know for the upcoming tax season.

What Are the IRS Income Tax Brackets for 2025?

An individual (or married couple, if they choose to file jointly) falls into one of seven tax brackets based on their income, and these brackets determine how much of that income is withheld in taxes. Married filers have different taxable income threshold amounts from single filers. Use this chart to help you compare more easily. 

2025 Income Tax Brackets for Single and Married Filers 

What Is the 401(k) Contribution Limit in 2025?

In 2025, the IRS has raised the 401(k) contribution limit to $23,500, allowing employees to set aside an additional $500 in their retirement accounts compared to the 2024 limit of $23,000. This increase follows a similar $500 jump from 2023 to 2024, reflecting the IRS’s ongoing adjustments for inflation.

What Is the 401(k) Contribution Catch-Up Limit in 2025?

In 2025, the 401(k) catch-up contribution limit for employees aged 50 and older remains at $7,500, meaning they can contribute up to $31,000 in total when combined with the standard limit of $23,500.

However, starting in 2025, employees aged 60 to 63 who participate in a 401(k) or similar employer-sponsored retirement plan have an even higher catch-up contribution limit of $11,250. This enhanced limit allows individuals in this age range to set aside more for retirement as they approach retirement age, helping them boost their savings during these critical years.

What Is the FSA Contribution Limit in 2025?

For 2025, the FSA contribution limit has increased to $3,300, up from the 2024 limit of $3,200. This adjustment allows employees to set aside an additional $100 in pre-tax funds for healthcare and dependent care expenses.

A flexible spending account, or FSA—also called a flexible savings arrangement—allows employees to save pre-tax dollars for these qualified expenses. For dependent care, expenses must be directly related to the employee’s work, such as childcare during working hours, but not for personal activities like a date night.

These changes apply to the 2025 tax year, impacting taxes filed in 2026. While the updates may not directly impact organizational budgets, they do affect payroll. HR can assist by informing employees of these updates, helping them understand their options as they plan their financial goals. Sharing this information can also enhance trust in HR’s role as a valuable resource.

To make it easier, just send your workforce this blog.

Resources for Other 2025 Compliance Questions: 

• HSA and HDHP Limits for 2025
• Can I Contribute to an HSA if My Spouse Has an FSA?

Additional Resources

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