Federal income tax brackets have increased in 2025. And some employees may see a hit to their paychecks as a result.
In Octoberthe Treasury Service announced that the 2025 federal income tax brackets would see a 2.8% increase. after the 5.4% increase in 2024.
And if you’re wondering, “Could moving to a higher tax bracket cause me to have a lower net income?” the short answer is: no.
In fact, for some employees, the raise may come with a slight increase in their paychecks based on their withholding tax.
how it works
Federal tax brackets are determined by a progressive tax system, that is, the level of tax rates”[increase] as an individual’s income grows,” according to Investopedia.
The bracket you’re in is based on how much tax you have to pay on each part of your taxable income.
“When all the tax brackets go up, but your salary stays the same, relatively speaking, that puts you on the bottom rung of the ladder,” Brian Long, CPA and senior tax advisor at Wealth Enhancement, he told NBC News.
“… Even if you earn a little bit more than last year, you could pay less tax in 2025 compared to 2024,” as the standard deduction also increases, Long told NBC News.
According to the IRSthe standard deduction is the “specific dollar amount that reduces the amount of income on which it is taxed.”
These deductions are adjusted annually based on inflation, your filing status, your age, disability, and whether another taxpayer claims you as a dependent.
In 2025, the standard tax deduction for married couples filing jointly increased to $30,000, up from $29,200 in 2024.
The standard tax deduction increase for filers is $15,000 this year, up from $14,600 in 2024.