Why Your First 2025 Paycheck Could Hold a Surprise

Your first paycheck of 2025 may be a bit higher because federal tax brackets and deductions have been adjusted.

Key Facts:

The IRS raised each federal income tax bracket threshold by about 2.8% for 2025.
The standard deduction goes up to $30,000 for married couples filing jointly (from $29,200) and $15,000 for single filers (from $14,600).
Experts note that smaller wage earners might still feel pinched by everyday costs like groceries and fuel.
Monitoring state and federal withholdings remains important, especially during life or income changes.

The Rest of The Story:

In October, the IRS released inflation-adjusted tax brackets for 2025. These brackets determine how much of your income gets taxed at each rate, and they rose at a more modest pace than the prior year because inflation has cooled.

Along with the bracket changes, the standard deduction is also higher, which means many taxpayers could see a small uptick in take-home pay if their wages stay the same.

Meanwhile, some costs, such as groceries, gasoline, and new cars, climbed in November, according to federal data. While these increases may eat into any extra pay, experts suggest there might still be a net advantage for certain households, depending on personal circumstances and monthly expenses.

Commentary:

Tax professionals advise that knowing your updated tax bracket and standard deduction can help you anticipate changes to your paycheck.

Brian Long, a certified public accountant, points out that earning the same salary could land you in a lower portion of the bracket, which often means keeping more of your own money.

“Even if you make a little more than last year, you could actually pay less in tax in 2025 compared to 2024,” because the standard deduction also went up, Long told CNBC.

Sheneya Wilson, another CPA, cautions that the rising costs of daily essentials could offset these benefits.

“It ends up nearly balancing out,” she said.

She recommends regularly checking tax withholdings, especially if you expect your financial situation to shift during the year.

The Bottom Line:

Though the new tax brackets and higher standard deduction may offer some relief, everyday expenses could dampen any gains. Keeping an eye on your pay stubs and personal finances will be key in 2025.