There is much speculation around what will happen in 2025. This is natural, given the new administration entering the White House, particularly in an election cycle where the majority of power consolidated into one party across both the presidency and Congress. We could devote the rest of the month’s articles to wading through the various promises, proposals and policies discussed during the election, but it’s still far too early to decipher differences between campaign rhetoric and actual policy. But there are quite a few things we can be certain about and a few others that are extremely likely. We can start planning for those now.

Let’s look at what most of us can expect in 2025.

Retirement accounts and social security

As usual, we have annual adjustments for inflation, and it’s important to account for these if you are saving for retirement. 401(k) and 403(b) type plan limits have increased from $23,000 to $23,500. However, under the SECURE 2.0 Act, employees aged 60 to 63 can contribute an additional $11,250, bringing their total annual contribution to $34,750. Contribution limits to traditional IRAs have remained the same, at $7,000, with a catch-up of $1,000 for those over 50.

If you are contributing to a traditional IRA, and hope to deduct the contribution, the income phase-out range is between $79,000 and $89,000, up from $77,000 to $87,000 in 2024 for a single taxpayer covered by your workplace retirement plan. For married couples filing jointly, if the spouse making IRA contributions is covered by their workplace retirement plan, the income phase-out range is between $126,000 and $146,000, up from $123,000 to $143,000. For Roth IRAs, the income phase-out range for single filers is between $150,000 and $165,000, up from $146,000 to $161,000. For married couples filing jointly, the range has been raised, with the phase-out sitting between $236,000 and $246,000.

For those of you collecting Social Security, you will notice a 2.5% jump in your existing benefit, which is the good news. On the other hand, the standard monthly premium for Medicare Part B has increased by 6%, from $174.70 to $185. Likewise, the annual deductible for Part B is rising from $240 to $257.

Taxes and estate

One of the most notable changes is the increase in the standard deduction to $15,000 for single-filers, and $30,000 for those married filing jointly. For those of you with qualified high-deductible health insurance plans, the individual contribution limit increased to $4,300, or $8,550 for families. Additionally, the individual annual gift limit has increased from $18,000 to $19,000, and the lifetime exemption — meaning the amount you can give away over your lifetime while avoiding estate taxes — has increased to $13,990,000 per person. All of these changes are in effect as of the beginning of this year and have been formally announced by the IRS.

On a separate note, the fate of the Tax Cuts and Jobs Act largely depends on who holds the presidency at its expiration at the end of this year. Since Trump enacted the Act, and will be the sitting president at its expiration, it’s very likely that its major provisions will be extended and even potentially expanded. Key provisions, like the 21% corporate tax, lower personal tax brackets, doubling of the estate lifetime tax exemption, higher AMT exemptions, and limited itemized deductions will all be kept in place if the Act is made permanent rather than allowed to sunset. While we can expect many of these things to remain unchanged, throughout his campaign, Trump has suggested some potential changes to come during his term. Besides making the TC&J Act permanent, Trump mentioned further cutting the corporate tax rate to 15%, lowering capital gains rates, eliminating the estate tax, reducing or eliminating payroll taxes, and revisiting the capping of the state and local tax (SALT) deduction. These potential changes are much more speculative, and it’s impossible to know whether any of these will be enacted or even addressed, though it does seem likely that the TC&J will survive the sunset date largely intact.

The important thing, this early in the year, is to be proactive. Focus on things you can control, like increasing your tax advantaged contributions, being diligent with saving, and maximizing the 2025 higher limits. Finally, protect your financial future by having a competent accountant, estate-planning attorney, and financial advisor in your corner, especially if you have an intricate financial situation, as the changes just keep coming.

Zach Harney is a wealth advisor at Monterey Private Wealth, Inc., an independent wealth management firm in Monterey. He welcomes questions you may have concerning investments, taxes, retirement, or estate planning. Send your questions to: Zach Harney, 2340 Garden Road Suite 202, Monterey, CA 93940 or email zach@montereypw.com.