The Internal Revenue Service (IRS) recently released the annual inflation adjustments for the tax year 2025. While marginal tax rates remained the same, the income limits for each tax bracket changed in accordance with the inflation adjustments. The annual inflation increase also affected contribution limits on tax-advantaged accounts such as 401(k)s, HSAs, 529s, and more. Below, we cover the updated 2025 federal tax brackets, as well as other tax changes related to the inflation adjustments that physicians should be aware of.
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What are the marginal tax rates for 2025?
The marginal tax rates did not change. For 2025, they remain at:
10%
12%
22%
24%
32%
35%
37%
There has been a lot of buzz around the 2017 Tax Cuts and Jobs Act (TCJA) that is set to expire if it isn’t renewed. These changes, however, are set to expire in 2025, so any increases in the marginal tax rates back to previous rates would not go into effect until 2026.
Learn more about how the marginal tax bracket system works.
What are the new federal tax brackets for 2025?
The IRS made inflation adjustments for both single taxpayers and married couples filing jointly. The new 2025 tax brackets by taxable income are:
Marginal tax rate | Single | Married filing jointly |
10% | $0 - $11,925 | $0 - $23,850 |
12% | $11,926 – $48,475 | $23,851 - $96,950 |
22% | $48,476 - $103,350 | $96,951 - $206,700 |
24% | $103,351 - $197,300 | $206,701 - $394,600 |
32% | $197,301 – $250,525 | $394,601-501,050 |
35% | $250,526 - $626,350 | $501,051-751,600 |
37% | $626,351 and above | $751,601 and above |
Learn more about determining your taxable federal income for the year.
2025 IRS contribution limits for retirement plans
With the annual inflation announcement came corresponding updates to contribution limits for tax-advantaged retirement plans. These plans can offer tax advantages for both W-2 and 1099 physicians. For 2025 (tax returns due in 2026), key changes to note include:
Employer sponsored plans such as 401(k)s, 403(b)s, 457s, and the TSP:
Annual employee deferral limit increased to $23,500
Normal catch-up contributions remained $7,500, for an increased total of $31,000
New higher catch-up contributions for individuals 60-63 allowed: $11,250, for a total of $34,750 (check to ensure your plan offers this option)
Traditional IRAs
Contribution limit remained $7,000
Deduction phase out limits:
Individuals covered by workplace plan: increased to $79,000 - $89,000
Married filing jointly where individual who contributes is covered by workplace plan: increased to $126,000 - $146,000
Married filing jointly where individual is not covered by workplace plan, but spouse is: increased to $236,000 - $246,000
Roth IRAs:
Contribution limit remained $7,000
Eligibility phase out limits:
Single and head of household filers: increased to $150,000 - $165,000
Married filing jointly: increased to $236,000 - $246,000
As a reminder, if you’re in the majority of physicians who earn too much to contribute directly to a Roth IRA, there is still the option of a Backdoor Roth IRA you can consider. In addition, it’s worth noting that income limits do not apply to Roth contributions into an employer sponsored plan, like a Roth 401(k), so doctors can consider this option as well.
Learn more about:
2025 IRS contribution limits for HSAs
We love Health Savings Accounts as a tax-advantaged option to help our physician members achieve financial independence, so long as a high-deductible health plan (HDHP) fits their family’s medical needs.
As a reminder, not all HDHP plans are qualified plans for a HSA, so double check during your open enrollment period when you’re signing up for your plan for the year.
Learn more about Health Savings Accounts (HSAs) and the benefits for doctors.
Changes to HSA plans for 2025 include:
Self-only coverage: increased to $4,300
Family coverage: increased to $8,550
Changes to 529 college savings plans for 2025
As noted below, the annual gift tax exclusion increased with the annual inflation adjustment, which impacts 529 college savings plans.
The annual limit increased to $19,000. As a reminder, this is a per person amount. If you and your spouse have a child, you can each gift them $19,000, or $38,000 total. If you have two children, together you can give $38,000 to each child, for a total of $76,000 for the year.
With the annual gift tax limit change, rules for superfunding a 529 plan will change accordingly as well.
Learn more about:
Other 2025 IRS tax updates physicians should know
2025 standard deduction for taxes
Along with the changes to the 2025 income tax rates, the IRS also increased the standard deduction for tax year 2025 (tax returns due in 2026) to:
$15,000 for single taxpayers
$30,000 for married couples filing jointly
$22,500 for heads of households
2025 Alternative Minimum Tax
The Alternative Minimum Tax exemption amount for tax year 2025 increased to:
Unmarried individuals: $88,100 with a phase out beginning at $137,000
Married filing separately couples: $68,650 with a phase out beginning at $137,000
Married filing jointly couples: $137,000 with a phase out beginning at $1,252,700
2025 estate and gift taxes
For estate planning, the IRS changed the following limits for 2024.
Estate tax exclusions increased to $13,990,000
The annual gift tax exclusion increased to $19,000 (important for 529 plans)
Learn more about estate planning for physicians.
Conclusion
With the recent increases from the IRS, it’s the perfect time to check in on your retirement planning and make sure you’re fully capitalizing on the tax-advantaged savings options available to you, especially since W2 employed doctors don’t have as many options for tax savings available as 1099 physicians have. If your savings is automated, it might not automatically increase next year for the changes with inflation adjustments, so it’s worth double checking to make sure you max it out.
Additional resources for doctors
We have a financial advisors database if you need help starting any of the tax-advantaged accounts referenced, or if you need professional advice on what the best investment strategy is for your current situation.
Explore related tax resources:
Dive deeper with investing resources: