WASHINGTON — The IRS has revealed that for the year 2025, individuals will be able to contribute more to their 401(k) plans, with the new limit set at $23,500. This marks an increase from the previous year’s limit of $23,000 in 2024.

In its annual review of cost-of-living adjustments for retirement plans, the Internal Revenue Service also announced that those who participate in 403(b) plans and the Thrift Savings Plan, used by federal employees, will see the same increase to $23,500 for 2025, again up from $23,000 in 2024.

While some contribution limits are being adjusted, others will remain unchanged. The annual contribution limit for Individual Retirement Accounts (IRA) will still be set at $7,000, and for those aged 50 and over, the catch-up contribution limit will stay at $1,000 for 2025.

Additionally, the IRS previously announced adjustments to the standard deduction for tax year 2025. For individuals filing as single or married but filing separately, the standard deduction will increase to $15,000, which is a $400 increase from 2024. Couples filing jointly will benefit from a standard deduction of $30,000, reflecting an $800 increase from the previous year. Heads of households will see a standard deduction of $22,500, up by $600 compared to 2024.

The income thresholds for all seven federal tax brackets have also been updated, accommodating changes due to inflation.

Moreover, the Social Security Administration recently disclosed a 2.5% cost-of-living adjustment for benefit recipients, beginning in January. This change means that millions of recipients will see an average increase of over $50 in their monthly benefit payments.