Hey! Happy New Year, everybody. I hope you had a great holiday season and some good New Year’s celebrations. As we get into 2025, it’s never too early to talk about all the excitement with doing taxes.
Yay! I want to teach you guys something. I’m sure a lot of you know this, but maybe some of you don’t.
But, uhm, they just really, I rolled out the 2025 tax year tax brackets. Now, this won’t affect you doing your taxes in April, in the next couple months, but this is, Well, it works the same way.
They just, The brackets change every year. And so, these numbers below are the numbers for 2025. So, this dictates, uh, the taxes that you will pay, uh, in 2026 on 2021.
2025’s income. And it looks like this. So, uhm, these brackets all got ratcheted up a little bit for inflation, but, uh, what this means is, let’s just look at the married filing jointly, for example.
Uhm, if you make between these different buckets over on, in the middle here, so on the first $23,850, you’re at the 10% rate, so on and so forth.
So, most folks fall into this, you know, if you make, as a married couple, more than $96,950, but up to $206,700, you would be paying in 22% taxes.
Now, the difference though is, is that we have a progressive graduated rate tax system. So, what that means is, if you fall into this bucket here, if you’re married and you made $180, let’s say, as a couple, uhm, 22%, you’re not paying 22% on the full amount.
Or, if you’re single and you made $100,000, let’s say, you’re not paying 22% on the entire amount. It’s a progressive system.
So, on the first, in the married example, up to $23,850, you’re only paying 10% in taxes, and then from $23,850 up to $96,950, then you’re paying 12% on that batch.
And then, finally, up to $206,700, you know, above $96,950, you’re paying 22% on that block. So, what that means is, is overall, your taxes are not as high as the bracket that you end up falling in.
The, the average weighted is going to be looking at, you know, the amount of money and then the other brackets below that.
So, it’s always something a little bit lower. But the point in knowing about this is, that once you reach these certain thresholds, there’s not a lot of incentive.
Or, if the incentive is, if you get a second job, or you make bonus income, or whatever, it’s just important to kind of be aware of how much more in taxes you end up paying.
Because there comes a point where it may not make sense to make a lot of extra money if it kicks you up into higher bracket, knowing that you’re just going to end up paying more taxes on that extra amount of money.
So, hopefully that makes sense. Also, the standard deductions, they’re going up a little bit. If you’re married, filing jointly, you know, you can write off without itemizing $30,000 and $15,000 if you’re single.
So, hopefully that helps. If you have questions on this, please reach out. Also, I have that great CPA. Uh, Jerry Evans, I’m happy to hook you up with her for those of you that don’t know about her and you need a little help and you don’t want to use, uh, a box to do your software or go to, uh, the blockheads
at H&R or any of those other companies. I’ve got a great CPA that I can connect you with, so let me know.
Uh, thanks again for watching and, uh, take care.
