The new year is mere weeks away. To make sure taxpayers are informed and prepared, the IRS announced inflation adjustments for many tax provisions in 2025, including marginal tax brackets and retirement account contributions.

Retirement plan contribution limits

The IRS announced higher contribution limits for 401(k), 403(b) and 457 plans next year.

The maximum amount a worker can contribute to those plans is $23,500 in tax year 2025, an increase of $500. The catch-up contribution limit for most plan participants age 50 and older remains unchanged at $7,500.

Beginning in 2025, some older workers can make additional catch-up contributions. As part of the SECURE 2.0 Act, plan participants who are between the ages of 60 and 63 can make catch-up contributions totaling up to $11,250 in tax year 2025.

Learn more about PERAPlus 401(k)/457 Plans

HSA/FSA contribution limits

The amount of money workers can contribute to medical savings accounts also will increase in 2025.

• HSA: Individuals enrolled in a high deductible health plan (HDHP) with a health savings account (HSA) will be able to contribute up to $4,300, and those with family coverage will be able to save a maximum of $8,550.
• FSA: For workers who don’t have an HDHP with an HSA and instead use a flexible spending account (FSA), the maximum contribution for 2025 is $3,300. For plans that allow unused balances to roll over, the maximum amount that can be rolled over will increase to $660.

2025 tax rates

Below are updated marginal tax rates for single taxpayers and married couples filing jointly. Visit the IRS website for more tax tables and additional details.

Note that since these changes are for tax year 2025, they will generally apply to tax returns filed in 2026; 2024 tax rates will apply to returns filed in 2025.

• 37% for incomes over $626,350 ($751,600 for married couples filing jointly)
• 35% for incomes over $250,525 ($501,050 for married couples filing jointly)
• 32% for incomes over $197,300 ($394,600 for married couples filing jointly)
• 24% for incomes over $103,350 ($206,700 for married couples filing jointly)
• 22% for incomes over $48,475 ($96,950 for married couples filing jointly)
• 12% for incomes over $11,925 ($23,850 for married couples filing jointly)
• 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly)

Standard deduction

In addition to updated tax rates, the IRS announced increases to the standard deduction for tax year 2025:

• Single taxpayers and married couples filing separately: $15,000 ($400 increase)
• Heads of household: $22,500 ($600 increase)
• Married couples filing jointly: $30,000 ($800 increase)

Taxpayers who are 65 or older can take an additional standard deduction, which is also adjusted for inflation. For tax year 2025, that amount is $2,000 for single filers and $1,600 for others.

Visit the IRS website for more adjustments to tax provisions in 2025.

PERA benefits and taxes

Colorado PERA benefits are subject to federal income tax, as well as applicable state and local taxes. PERA retirees who would like to update their tax withholding can do so by logging in to their secure member account or completing a paper Form W-4P.

Retirees and benefit recipients can expect to receive their 1099-R tax forms for tax year 2024 in January 2025.

Learn more at copera.org/taxes-on-benefits.