Crunching Number$ | Milestone Financial Planning 

As we begin 2025, several important financial and tax updates have been made that could impact your planning for the year ahead. From tax brackets to retirement contributions, here’s a quick rundown of some of what’s changed and how it may affect you. Make sure to check out Crunching Numbers for more important information! 

1. Retirement Contributions 

Good news for your retirement savings! Contribution limits for certain accounts have been raised for 2025. Among these increases are 401(k)/403(b) contribution limits, which have increased to $23,500 for this year. There is also an additional catch-up increase to $11,250 for those ages 60-63 starting in 2025. (Thanks, Secure Act 2.0!) These are just a few of the several updates to retirement accounts. For additional details, check out this blog. You can also check the “Retirement” section of Crunching Numbers for more information. 

2. Medicare Adjustments 

Medicare will also see several important changes in 2025. One major update is found in Part D. As a result of the Inflation Reduction Act, the “donut hole” of Part D is no longer. In prior years, this is the range where you pay a higher percentage of medication costs but have not reached the “catastrophic coverage” phase ($8,000+ in 2024). For 2025, the “initial coverage” phase now starts at $590, the maximum deductible, and tops out at $2,000, a significant decrease from $5,030 in 2024. This is the range after you have paid the maximum deductible, where you still pay a percentage of the cost in the form of coinsurance or copayments. Rather than having this gap in coverage, the catastrophic coverage phase now starts at $2,000 in 2025, right after the initial coverage phase. At this phase, your drug costs are reduced to 5% of the total. Aside from Part D, inflation-adjusted numbers for 2025 can be found in Crunching Numbers. For more in-depth analysis on Medicare for this year, check out our recent Medicare Open Enrollment blog by Jennifer Climo. 

3. Standard Deduction 

The IRS reports that around 90% of people take the standard deduction, which allows taxpayers to reduce their taxable income. The 2025 standard deduction is now $15,000 for individuals (up from $14,600 in 2024), $30,000 for married couples filing jointly (up from $29,200), and $22,500 for heads of households (up from $21,900). Although this increase is smaller than last year’s, it still allows for a further reduction in taxable income and overall tax liability.  

4. Other Areas 

Our Crunching Numbers update documents many other facts and figures that may apply to you. Please see the sections on the premium tax credit, the Medicare income-related penalty cost, and the gift and estate tax limits. 

As we move into 2025, these adjustments offer new planning opportunities that may need to be considered. The examples above are just a few of the several updates, and Crunching Numbers is here to help you stay up to date for this year. Although there is a lot to consider, you don’t have to do it alone. If you need assistance with your tax planning or retirement planning in general, please reach out to our team.    

_{Crunching Numbers is a tool for financial planning and tax professionals to use as a quick reference guide for finding important numbers related to our work. The guide is offered in both PDF and Excel versions}, _{depending on which format is most useful for you. We did our best to cite the sources for all numbers included in the guide so that if we made a typo, you could double-check the source. If you find a mistake, please contact us at info@milestonefinancialplanning.com so we can correct it. Please share this with anyone who you think would find it helpful.}