As we enter the new year, there are several meaningful changes to tax and retirement planning limits that are important to be aware of. The IRS typically updates these figures every year, and by staying informed about the changes, you can adjust your financial and retirement planning strategies accordingly.

Here’s what to know to start your year off right:

Retirement Plan Contributions

The annual contribution limit for qualified retirement plans, such as 401(k) and 403(b) plans, has increased to $23,500 for 2025, while the catch-up contribution limit for people age 50 or over stayed the same at $7,500. One new update to contribution limits this year is an enhanced catch-up contribution amount of $11,250 if you are between the ages of 60 and 63. This change is intended to help people who may be underprepared for retirement by giving them more of an ability to catch up with their savings as they near retirement age.

The annual contribution limit for traditional and Roth IRAs did not change for 2025, and remains at $7,000. The $1,000 catch-up limit for people age 50 or older also remains the same.

For anyone age 70 ½ or older, the limit on making tax-free qualified charitable distributions to charities or nonprofits from an IRA has increased to $108,000.

Health Savings Account Contributions

In 2025, the amount you can contribute to a Health Savings Account has increased to $4,300 for individuals and $8,550 for families.

Annual Gift Tax Exclusion

The annual gift tax exclusion has increased to $19,000 for 2025, and the estate, gift and generation-skipping transfer tax exclusion amount has increased to $13,990,000.

Tax Rates and Standard Deductions

The rates for income tax brackets did not change from 2024, but income levels have increased for each threshold no matter your tax filing status. This is also the case for long-term capital gains tax rates.

The standard deductions for 2025 have increased to $15,000 for single filers and $30,000 for married filing jointly.

Potential Tax Code Changes?

Our team is closely watching what happens with the current federal tax code, portions of which were passed in 2018 as part of the Tax Cuts and Jobs Act. If new legislation is not enacted, several provisions of the tax code will sunset at the end of 2025 and revert back to pre-2017 rules and limits. The Bell Bank Wealth Management team will be paying close attention as the new administration enters office and begins to work through its agenda. We will share updates with you if or when they become available.

Questions?

If you have any questions about what these changes mean for you and your financial and retirement planning, please do not hesitate to contact us!

This article was published in the Q1 2025 issue of the Bell Wealth newsletter.