WASHINGTON (AP) — The IRS announced Friday that it will increase the amount individuals can contribute to a 401(k) plan to $23,500 in 2025, up from $23,000 in 2024.
The Internal Revenue Service detailed the annual cost-of-living adjustment increases for pension plans and other retirement accounts.
Workers who participate in 403(b) and federal thrift savings plans can also increase their annual contributions from $23,000 in 2024 to $23,500 in 2025.
Some annual contributions remain unchanged. The annual IRA contribution limit will remain at $7,000, and the IRA catch-up contribution limit for people age 50 and older will remain at $1,000 in 2025.
The agency last week announced an increase in the standard deduction for the 2025 annual inflation adjustment. For single and married taxpayers filing separately for the 2025 tax year, the standard deduction will increase to $15,000, an increase of $400 from 2024.
For couples filing jointly, the standard deduction will be $30,000 in 2025, an $800 increase from the previous year. Heads of households will also receive a standard deduction of $22,500, an increase of $600 starting in 2024.
Income standards for all seven federal tax bracket levels were also adjusted upward.
The Social Security Administration announced last month that it would increase the cost of living for benefit recipients by 2.5% starting in January. This equates to an average jump of more than $50 in the monthly checks of millions of people.
