IRS unveils new income tax brackets and deductions for 2025
The IRS has announced key tax changes for 2025, including adjustments to income tax brackets, standard deductions, and capital gains rates due to inflation. These updates will affect how much Americans pay in taxes when filing in 2026.
For income taxes, the top bracket remains at 37%, applying to single filers earning over $626,350 or married couples with income over $751,600.
The lowest rate, 10%, applies to incomes under $11,925 for individuals and under $23,850 for couples. Meanwhile, standard deductions will increase slightly, with single filers able to claim $15,000 and married couples deducting $30,000. Heads of households will see their deduction rise to $22,500.
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Capital gains tax rates will also be adjusted. Single filers with income up to $48,350 and married couples earning up to $96,700 will continue to qualify for the 0% rate on long-term capital gains.
Additionally, the Earned Income Tax Credit will increase to a maximum of $8,046 for those with three or more children. These changes are designed to provide relief for taxpayers as they face rising inflation.
Trump promises to end ‘double taxation’ on Americans abroad
Former President Donald Trump pledged to eliminate filing U.S. taxes for Americans living abroad as part of his 2024 campaign tax reform platform. The proposal aims to end what is often referred to as “double taxation” for expatriates, a move that could simplify tax obligations for over 4 million U.S. citizens overseas.
Currently, Americans living abroad must file income, estate and gift tax returns with the IRS, even if they pay taxes in another country. While some expatriates benefit from credits and exclusions, many still face complex and sometimes costly tax filings.
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Trump’s proposal, which would require congressional approval, has sparked debate, with critics arguing it could encourage tax avoidance by wealthier individuals relocating to low-tax countries.
Supporters believe it would reduce unnecessary paperwork and make life easier for ordinary Americans living overseas. A notable aspect of the current system is while it adds a lot of paperwork, it doesn’t necessarily add any additional financial burden. Expats currently get U.S. tax credits for taxes that they pay to foreign governments, and any income over $126,000 is exempt.
This promise is part of a broader series of tax cuts Trump is proposing, which also includes eliminating taxes on tipped wages, overtime, and Social Security benefits. Experts estimate the combined tax cuts could cost over $10 trillion over the next decade.
Harris and Trump both make national debt worse, ‘especially Trump’
Policies proposed by former President Donald Trump would add more than twice as much to the national debt as policies proposed by Vice President Kamala Harris, according to a bipartisan analysis by the Committee for a Responsible Federal Budget. The middle estimate for Harris’ plans is that they increase the debt by $3.5 trillion through 2035, whereas Trump’s middle estimate adds $7.5 trillion.
On the low end of the range, Harris adds nothing while Trump adds $1.45 trillion. On the high end, Harris’ proposals have the ability to add $8.1 trillion while Trump’s tops out at $15.15 trillion.
“The bottom line is that we are already adding tremendously to the national debt under current law, and both candidates would make that even worse, especially President Trump,” Marc Goldwein, senior vice president and senior policy director at CRFB, said.
The national debt today is nearly $35.7 trillion. It currently costs more than $1 trillion in interest payments to maintain the current debt load.
We don’t endorse a particular candidate and we didn’t go in this trying to come up with a particular outcome. This is just the math.
Marc Goldwein, Committee for a Responsible Federal Budget
Straight Arrow News interviewed CRFB’s Goldwein for more information about the group’s economic analysis of both candidates. The following has been edited for clarity. Watch the full interview in the video above.
Simone Del Rosario: Why should voters care about the debt?
Marc Goldwein: Look, debt is eating our income growth. Debt is what causes inflation, what causes high interest rates and what causes interest payments to now be the second largest government program, larger than defense, larger than Medicare, and leaving less room for us to invest in just about anything else.
Simone Del Rosario: Your middle estimates for both candidates show that Harris would add about $3.5 trillion to the debt over the next decade while Trump would add $7.5 trillion in debt. What are the policies that are specifically adding to the debt for these two different candidates?
Marc Goldwein: For Vice President Harris, it’s [the] extension of some parts of the tax cuts from 2017, it’s a very big child tax credit, and then it’s a bunch of spending on everything from paid leave to childcare to long-term care to preschool, partially paid for with taxes on the rich and on corporations.
For President Trump, it’s mostly just a lot of tax cuts. We have a full extension of the Tax Cuts and Jobs Act, getting rid of the cap on the SALT deduction, no taxes on tips, no taxes on overtime, no taxes on Social Security benefits. And then on top of that, deportations and higher spending on defense; again, partially offset, mainly with tariffs, but in neither case are those offsets covering the costs.
Simone Del Rosario: Do your tariff estimates also include that 60% tariff on China?
Marc Goldwein: We do. Our central estimate assumes that there’s a 10% universal tariff. It’s 60% on China, and in addition, there’s some retaliatory tariffs on a one-off basis. But the important thing with these tariffs is, if they work as intended, they will reduce trade, and so they don’t raise as much revenue as you might think, just taking 10% of all of our imports, for example.
Marc Goldwein: That’s right, the tariffs could pay for some of the tax cuts, but they’ll barely cover the no taxes on tips and no taxes on overtime. They aren’t going to cover the $8 trillion-plus of tax cuts that President Trump is proposing.
Simone Del Rosario: And then, on the other hand, Marc, there is no guarantee that a potential President Harris would get those tax hikes on the rich that she’s looking for.
Marc Goldwein: That’s right. Look, in both the cases, these are highly speculative, because we’re analyzing what they’re calling for, not what will actually happen. In the real world, these offsets are hard. It’s hard to get taxes on the rich, taxes on corporations, tariffs, lower drug prices. It’s also hard to get some of the spending. So these are not predictions of what will happen. These are estimates of what would happen if the candidate’s plans were enacted in full.
Simone Del Rosario: So what should voters do with this information?
Marc Goldwein: They should demand offsets. Look, a debt is just tax on future generations. It’s a huge burden in terms of slower income growth, higher interest rates, higher inflation. And we need the candidates to be paying for their promises, and if they can’t, we need those promises to be scaled way back.
Simone Del Rosario: What aren’t you hearing from the candidates that you wish you were hearing at this point in the race?
Marc Goldwein: Social Security is nine years from insolvency. I’m not hearing a plan from either candidate to prevent that 21% across-the-board cut that’s scheduled to happen under current law.
Simone Del Rosario: And peel back the curtain for me a little bit and just explain how you guys went about this analysis. I assume it took you a very long time to do so.
Marc Goldwein: We went painstakingly through both candidates websites, through their platforms, through their speeches. We talked to the campaign staff, we looked at news articles, and we tried to discern what are official campaign policies, how do we interpret them, and how much do they cost? And each step of the way, we need to make a lot of choices, which is why we have a low-cost estimate and a high-cost estimate reflecting the range of possibilities, along with our central estimate.
I have to give credit to [my] amazing staff that put many, many, many hours into this over the last year, estimating every last policy, including policies that didn’t even make it to the finish line because they were rejected or because they were policies from the Biden campaign that didn’t make it over to the Harris campaign. But it’s an incredible amount of work and I recommend you checking out the report at CRFB.org. It’s pretty lengthy, but we have a short summary at the front that I think gives all the most important details.
Simone Del Rosario: Here at Straight Arrow News, we’re about unbiased, straight facts. We like to bring nonpartisan information to people so that they can decide for themselves as they get ready to vote in this upcoming election. How should people interpret these findings? Are they at all partisan?
Marc Goldwein: Look, we don’t endorse a particular candidate and we didn’t go in this trying to come up with a particular outcome. This is just the math. We looked at the candidate’s plans and this is what we think they would add to the debt.
You then need to weigh that against the benefits of whatever the candidates are offering. So one voter might say, sure they add a trillion dollars to the debt, but it’s for this very important policy; or sure they balance the budget, neither of them do, but let’s say they did, but they do in this awful way.
So fiscal policy, how much they add to the debt, should be just one consideration among many. I happen to think it’s a pretty darn important one because our debt is headed to the largest share of the economy it’s ever been. We’re heading to record levels of debt and I do fear we have a debt crisis on the horizon if we don’t do something.
But you need to vote based on what matters most to you, and this information is just meant to inform your decision, not to dictate it.
Simone Del Rosario: I want to thank you and your team for your analysis. We rely on you guys often to get the straight facts when it comes to how these policies impact our debt and our country. So thank you so much, Marc.
Whose economic policies are worse for the nation’s debt? Trump’s or Harris’?
If there’s one thing both presidential candidates know, it’s that the economy is the top issue for voters. Both Kamala Harris and Donald Trump want voters to believe they have the optimal economic plan over their opponent.
“He doesn’t actually fight for the middle class. Instead, he fights for himself and his billionaire friends,” Harris said of Trump. “And he will give them another round of tax breaks that will add up to $5 trillion to the national debt.”
“She’s raising taxes. She’s going to give a tax increase of four to five times what people and companies are paying right now. The country will go into a depression if they do it,” Trump said of Harris.
Neither candidate is winning any awards for deficit reduction.
Marc Goldwein, Committee for a Responsible Federal Budget
For months, voters have said they trust Trump more with the economy but Harris is chipping away at that lead. In the latest Reuters/Ipsos poll, 43% of voters preferred Trump’s approach to the economy compared to 40% who preferred Harris’ approach. That 3% point difference is within the margin of error. Just one month ago, Trump had a 12% lead.
Another boost to Harris’ camp is that independent analyses show Trump’s economic proposals will add more to the growing national debt than Harris’. According to the Penn Wharton Budget Model, Harris’ campaign promises would increase deficits by $2 trillion over the next 10 years, while Trump’s promises would add $4.1 trillion in deficits, more than double that of Harris.
However, these analyses do not include revenue changes from both candidates’ proposals not to tax tips and Trump’s comments on widespread tariffs. Penn Wharton notes that key details are missing from Trump’s tariff proposals to calculate the impact and while they could raise trillions of dollars in new revenue, tariffs could also lead to revenue losses from retaliatory actions.
What I’m actually mostly worried about is the commonalities as they are trying to outbid each other to see who can cut taxes more and who can increase spending more. And they’re not trying to outbid each other at all on who can reduce the deficit more or save Social Security better.
Marc Goldwein, Committee for a Responsible Federal Budget
Penn Wharton is not the only independent source calculating the impacts of both Trump’s and Harris’ economic policies. The Committee for a Responsible Federal Budget’s Budget Watch digs into each proposal as it comes in. Straight Arrow News interviewed Marc Goldwein, CRFB’s senior vice president and senior policy director, for its nonpartisan take.
This transcript has been edited for clarity. Watch the full interview in the video above.
Simone Del Rosario: Trump says his policies, like his tax cuts, will pay for themselves through economic growth. But are you also finding that the damage to the nation’s deficits is more under Trump’s proposals than Harris’?
Marc Goldwein: I think it’s too soon to tell who is worse on the debt. Vice President Harris actually has not released most of her agenda yet, and so it’s very premature. And for President Trump, we do have a lot of tax cuts, but we also have things like tariffs that raise revenue.
It’s very easy to make promises. It’s very hard to deliver on them, and it’s even harder to sustain them if you don’t have a good plan to pay for your promises.
Marc Goldwein, Committee for a Responsible Federal Budget
Simone Del Rosario: That’s a really fair point. Both are trying to vie for this position as more fiscally responsible. But at the end of the day, both plans would add to the nation’s debt, which exceeds $35 trillion today.
Marc Goldwein: Yeah, it’s tremendous. I like to measure debt relative to the economy, and by that measure, we’re at 100%. We’ve only ever been there once in our history and it was right after World War II.
Simone Del Rosario: From what we know of their plans, the economy will grow more under Trump’s policies than Harris’, right?
Marc Goldwein: President Trump supports a lot of policies that are probably pro growth; for example, lowering taxes on Social Security benefits and for businesses and individuals. But he also supports a lot of policies that would shrink economic growth; for example, tariffs. Tariffs are almost universally understood to slow economic growth; and deportation, if by no other reason than you’re literally losing the number of workers.
So I think if you look at Trump’s plan on the whole, it’s not actually clear which direction it goes to. [It’s a] similar situation with Vice President Harris’ plan. We don’t have all the details. In general, the tax increases she’s talked about, I think tend to reduce economic growth, but if she pays for them, that can be a step in the right direction.
Simone Del Rosario: These analyses also assume that either candidate gets their way. Harris, like you said, plans to pay for her spending by raising taxes on corporations and the wealthy. Congress has to agree to that and there’s no guarantee that’s going to happen. How important is that part of her plan to minimize how much the national debt would grow under her spending policies? And what happens if she doesn’t get those tax raises?
Marc Goldwein: It’s really important that both candidates be firm here that they’re not going to support their agenda unless it’s fully paid for, right? Because what happens in the campaign and what happens in Congress is obviously always going to be different. What’s important is that you have that bottom line.
This is what President Obama did. He said, ‘Look, I’m going to negotiate the details of my health care plan, but it’s got to be fully paid for.’ We see similar things from other administrations as well on the left and right. You have to have that bottom line.
Simone Del Rosario: Talk to me specifically about the main differences between these two candidates and their proposals. What groups stand to benefit the most from each candidate’s economic policies?
Marc Goldwein: Well, actually, what’s interesting to me is a lot of the similarities. There’s a tit for tat here where President Trump says no taxes on tips, and so Vice President Harris says, ‘Well, I’m not going to do that either.’ The Democrats say a $3,000 child tax credit, so vice presidential candidate [JD] Vance says, ‘Maybe it’s $6,000 $5,000.’ So Democrats come back and say $6,000.
What I’m actually mostly worried about is the commonalities as they are trying to outbid each other to see who can cut taxes more and who can increase spending more. And they’re not trying to outbid each other at all on who can reduce the deficit more or save Social Security better.
Simone Del Rosario: But both parties say no-taxation-on-tips is a policy they want to move forward with. It sounds great to get people to vote for you, but that’s not a good policy when it comes to the budget, right?
Marc Goldwein: Yeah, I’ve yet to meet an economist that thinks we should have a lower tax rate for somebody that’s a waitress making $15 an hour versus somebody working at McDonald’s making $15 an hour. So I’m not sure this is the right kind of policy.
That’s what we see during campaign seasons: a lot of policies that maybe don’t make sense in the real world because they’re trying to buy votes. And that’s again, why fiscal responsibility is so important, because if you have to tell the voters, ‘Sure, you get this, but in exchange, you’re going to get less of this, you’ve got to pay more on that,’ that allows people to weigh the trade-offs appropriately.
Simone Del Rosario: What is your advice for voters as they’re trying to educate themselves on these different economic proposals to decide their vote?
Marc Goldwein: I would say, if something seems too good to be true, it probably is. It’s very easy to make promises. It’s very hard to deliver on them, and it’s even harder to sustain them if you don’t have a good plan to pay for your promises.
Day 1 of Democratic National Convention, Biden slated to speak tonight
The Democratic National Convention kicks off in Chicago as President Joe Biden is among the names scheduled to speak the first night. And Secretary of State Antony Blinken is in Israel preparing for what he calls a ‘decisive moment’ in cease-fire talks. These stories and more highlight The Morning Rundown for Monday, Aug. 19, 2024.
Day 1 of Democratic National Convention, Biden slated to speak
The stage in Chicago for the start of the Democratic National Convention (DNC) that kicks off Monday. The four-day event will conclude with Vice President Kamala Harris and Minnesota Gov. Tim Walz formally accepting the Democratic nominations for president and vice president.
Part of the agenda for day one includes special tributes planned to honor the opening night’s headline speaker, President Joe Biden. Former Secretary of State Hillary Clinton is also slated to speak at the DNC Monday night.
Other speakers you’ll see over the next few days include former presidents Barack Obama and Bill Clinton, former House Speaker Nancy Pelosi and former first lady Michelle Obama.
Mayor Brandon Johnson said Chicago is “prepared and ready” and security has been beefed up inside and outside the convention as thousands of Gaza war protesters are planning to descend on the city.
The Democratic Party has released some of its key policy points it expects to address over the next four days. Those include raising the federal minimum wage to $15 per hour, making the child tax credit permanent and IVF and abortion protections.
Ahead of the DNC, Harris and Walz spent time in the battleground state of Pennsylvania. Former President Donald Trump will be back in Pennsylvania Monday after also spending time over the weekend in the Keystone State.
A new ABC News poll has Harris leading Trump overall 50 to 45%. However, Trump is leading Harris on key issues for voters: the economy and immigration.
Former Congressman George Santos to plead guilty to federal charges
Former Congressman George Santos, R-N.Y., is expected to plead guilty to federal charges Monday, Aug. 19 afternoon. It’s a reversal of his previous plea of not guilty.
Santos, who was expelled from the House of Representatives, faces 23 felony charges, including defrauding donors, lying about his finances and needlessly accepting unemployment benefits, among other things.
A guilty plea would avoid a trial, which is scheduled to begin next month. Sources close to the matter told The New York Times Santos is expected to give a statement acknowledging the crimes he has agreed to plead to.
Blinken: ‘This is a decisive moment’ in cease-fire talks
Secretary of State Antony Blinken is in Israel Monday, meeting with top Israeli officials before traveling to Egypt for ongoing negotiations to reach a cease-fire and hostage release agreement. This is his ninth trip to the region since the Israel-Hamas War began.
“This is a decisive moment,” Blinken said at a press conference in Tel Aviv. “Probably the best, maybe the last opportunity to get the hostages home, to get a cease-fire and to put everyone on a better path to enduring peace and security.”
Israeli Prime Minister Benjamin Netanyahu’s office has expressed “cautious optimism” that a deal can be reached, while Hamas is accusing Israel of stalling efforts to reach a deal in order to continue striking inside Gaza.
The U.S. Citizenship and Immigration Services will begin accepting applications for individuals requesting “parole in that place” that would allow migrant spouses without legal status to apply for a green card and eventually get on a path to citizenship.
To be eligible, the spouses must have been continuously in the U.S. for at least 10 years, not pose a security threat or have a disqualifying criminal history, and have been married to a U.S. citizen before June 17 — the day before the program was announced. They must also pay a $580 fee to apply and fill out an application explaining why they deserve humanitarian parole and providing a list of supporting documents proving how long they have been in the country.
The Biden administration says about 500,000 people could be eligible for “parole in place” plus about 50,000 of their children.
Egg prices on the rise again as bird flu impacts supply
Egg prices are on the rise — again. According to the Consumer Price Index, egg prices were up by nearly 20% in July, and economists say inflation is not the issue this time.
Rather, it’s believed to be the ongoing bird flu outbreak limiting the supply of eggs.
The Bureau of Labor Statistics said the average rate for a dozen large, grade A eggs topped $3 in July for the first time in more than a year. July also marked the third month egg prices rose on an annual basis, a reversal after a year of relative decreases.
Perdue recalls over 167K pounds of chicken after wire found in packaging
The products are the Perdue Simply Smart Organic gluten-free breaded chicken breast nuggets, the breaded chicken breast tenders, and the Butcher Box organic free fully frozen-cooked breast chicken nuggets. All have a “best-if-used-by date” of March 23, 2025.
Kamala Harris’ economic plan is Biden 2.0 on prices, housing and child tax credit
Vice President and Democratic presidential nominee Kamala Harris gave the first real look into her economic agenda Friday, Aug. 16. The speech in Raleigh, North Carolina, marks the first major policy address given since she has taken over the top of the ticket.
Harris is looking toward the economy as it remains one of the top priorities for the majority of voters. The policies she laid out this week take those of the Biden-Harris administration a step further.
Price gouging
Harris said she supports a federal ban on price gouging. While most states have some sort of ban on the books in cases of emergency, this would allow the federal government and Federal Trade Commission to enforce laws nationwide.
“Look, I know most businesses are creating jobs, contributing to our economy and playing by the rules. Some are not and that’s just not right,” Harris said Friday. “And we need to take action when that is the case.”
Vice President Harris: As president, I will work to pass the first-ever federal ban on price gouging on food pic.twitter.com/NE4t50hpfc
President Joe Biden has made price gouging a key talking point of his presidency, especially in the case of pharmaceuticals. He touted allowing Medicare to negotiate drug prices and created a task force to deal with unfair and illegal pricing spearheaded by the Department of Justice and FTC.
“Too many corporations raise prices to pad their profits, charging more and more for less and less,” Biden said during his 2024 State of the Union address. “That’s why we’re cracking down on corporations that engage in price gouging and deceptive pricing.”
Sen. Elizabeth Warren, D-Mass., introduced a bill on a federal price gouging ban in the Senate in February. That bill makes it illegal for a person to sell something at a grossly excessive price, leaving the FTC to define what is considered “grossly excessive.”
But critics say an anti-price gouging policy is tantamount to price controls.
“Government-imposed price controls create scarcity and a vicious cycle of poverty and dependence on government. So naturally, Kamala Harris likes them,” Sen. Mike Lee, R-Utah, posted on X.
🧵 1. Government-imposed price controls create scarcity and a vicious cycle of poverty and dependence on government. So naturally, Kamala Harris likes them. pic.twitter.com/679Xn49FFA
Grocery prices have climbed 21% since Biden took office. Democrats often blame corporate greed while Republicans blame federal spending.
While grocers did see elevated profit margins during the height of inflation, an analysis by the Federal Reserve Bank of San Francisco said markups are not the main driver of inflation post-pandemic, claiming supply chain shocks drove prices up.
For his part, former President Donald Trump highlighted how he plans to bring down grocery prices on Thursday.
“We’re going to drill, baby drill, that’s going to bring down prices of everything, because energy brought it up,” Trump said.
Housing affordability
Harris is also building off of the Biden administration’s efforts to increase housing inventory and affordability. Biden outlined plans for 2 million homes during his State of the Union address.
“I’ve cut red tape so more builders can get federal financing, which is already helping build a record 1.7 million housing units nationwide,” Biden said in March. “Now pass my plan to build and renovate 2 million affordable homes and bring those rents down!”
Haris is upping the ante to 3 million housing units in her first term, including tax incentives for builders to expand supply.
“I know what home ownership means,” Harris said Friday. “It’s more than a financial transaction. It’s so much more than that.”
The vice president also proposed a $25,000 tax credit for first-time home buyers as down-payment assistance, a policy that would require approval from Congress.
Trump also addressed housing needs and lack of inventory this week.
“We’re going to open up tracks of federal land for housing construction,” Trump said Thursday. “We desperately need housing for people who can’t afford what’s going on now.”
Most federal land is controlled by the Bureau of Land Management, Fish and Wildlife, the National Park Service and the Department of Agriculture.
Biden called to make permanent the 2021 pandemic-era child tax credits at $3,600 per child. When the policy expired, it reverted to $2,000 per year.
“Restore the Child Tax Credit because no child should go hungry in this country,” Biden said in his address to Congress. “The way to make the tax code fair is to make big corporations and the very wealthy finally pay their share.”
Harris is looking to expand the tax credit and is also looking for a subsidy reminiscent of baby bonuses that would give parents $6,000 the first year the child is born.
“The costs can really add up, especially for young parents who need to buy diapers and diapers and clothes and a car seat and so much else,” Harris said.
This policy is where the campaigns of Harris and Trump are most aligned.
“We will support baby boomers and we will support baby bonuses for a new baby boom,” Trump said in August of last year.
Trump’s running mate, Sen. JD Vance, R-Ohio, laid out his own plan for the child tax credit over the weekend.
“I think one of the things you can do is make it bigger per child,” Vance said on CBS Face the Nation. “I think we’d love to see it at a higher dollar value. And again, President Trump and I have proposed that. I mean, look, I’d love to see a child tax credit that’s $5,000 per child.”
Despite the appearance of bipartisan support, a bill that would have extended the popular pandemic-era child tax credit failed to pass the Senate this summer.
