Navigating taxes can feel like a chore, but staying informed about annual updates is crucial, especially if you’re a high-earner or near retirement. The 2025 tax updates bring some significant changes for individuals in higher tax brackets. 

In this article, we’ll break down what you need to know and how these changes might impact your financial strategies. Whether you’re preparing for retirement, maximizing your investments, or planning to shield your wealth from high tax rates, these 2025 numbers offer a roadmap.

2025 Tax numbers

2025 Tax Brackets: What’s Changed?

Federal Income Tax Brackets

Let’s start with the federal income tax brackets for 2025. The 37% top tax rate applies to taxable income over $751,600 for married couples filing jointly (MFJ) and $626,350 for single filers​. 

If you’re a high-earner, you’ll want to review your current tax situation and see if there are ways to reduce your taxable income, especially if you’re near these thresholds. Strategies like charitable donations, deferring income, or taking advantage of employer-sponsored retirement plans can help. 

Here’s a helpful article on how Maximizing Your After-Tax Returns: Advanced Strategies for High Earners to get you thinking about your next moves for 2025.

Long-Term Capital Gains

When it comes to selling investments, the long-term capital gains rates remain in place: 0%, 15%, and 20%. For most high earners, you’ll likely fall in the 15% – 20% category if your taxable income exceeds $96,701 (MFJ) or $48,351 (single)​. 

If you’ve held assets for over a year and are considering a sale, timing is everything. Planning these sales can save you thousands in taxes.

Consider the strategy of harvesting losses to offset gains, or delaying a sale to a lower income year to potentially reduce your tax bill. And if you’re managing sudden wealth, here’s a great guide on The Surprising Impact of an Unexpected Wealth Event.

Understanding Medicare Premiums and IRMAA

Medicare’s Income-Related Monthly Adjustment Amount (IRMAA)

Medicare premiums can add up, and high-income individuals often face extra charges through the IRMAA surcharge. For 2025, if your Modified Adjusted Gross Income (MAGI) from 2023 was above $212,001 (MFJ) or $106,001 (single), your premiums will be higher than the standard rates​. Medicare Part B surcharge ranges from $74 to $443.90 depending on income levels​.

Medicare Part D surcharge ranges from $13.70 to $85.80 depending on income levels​. This is why income management is key, particularly if you’re receiving dividends, capital gains, or other income. 

It’s a balancing act. Here’s an in-depth read on how to Maximize Your Benefits After Meeting Your Health Insurance Deductible that can further help you optimize healthcare costs.

Social Security and Retirement Contribution Limits

If you’re contributing to retirement accounts like a 401(k), IRA, or SEP IRA, 2025 has brought some changes to the contribution limits. Here’s a quick breakdown:

• 401(k), 403B, and 457 contribution limit: $23,500 (with a catch-up of $7,500 if you’re over 50)​.
  • If you are 60 – 63, you can make a $11,250 catch up contribution.
• SIMPLE IRA contribution limit: $16,500 with a $3,500 catch-up​.
  • If you are 60 – 63, you can make a $5,250 catch up contribution.

Maximizing these contributions can help reduce your taxable income while saving for retirement. If you’re nearing retirement or want to learn more about how retirement contributions impact your tax picture, check out our article on Important Tax and Financial Numbers for 2025.

Social Security Wage Base

For high earners, the Social Security wage base for 2025 has increased to $176,100. This means any income above this threshold isn’t subject to the Social Security payroll tax​. 

If you’re nearing retirement, it’s also helpful to keep track of your full retirement age (FRA). For those born between 1955-1960, your FRA is between 66 and 67​. 

If you delay collecting Social Security, you can increase your benefits by up to 8% per year, for those with birth dates 1943 and later.

The Net Investment Income Tax (NIIT)

The 3.8% Net Investment Income Tax (NIIT) kicks in for individuals with MAGI over $250,000 (MFJ) or $200,000 (single)​. This additional tax applies to income from investments, including dividends, rental income, and capital gains.

It’s easy to overlook the NIIT, but it can have a significant impact on your overall tax bill. The key here is to manage your investment portfolio to stay under these thresholds where possible.

For more tips on shielding your wealth, take a look at How to Protect Your Wealth From Unforeseen Risks.

Estate and Gift Tax Exemptions

Estate Tax Lifetime Exemption

In 2025, the estate tax lifetime exemption is $13.99 million​. This is a critical number for high-net-worth families looking to transfer wealth to the next generation. 

If your estate exceeds this exemption, any amount above the limit is taxed at 40%. The good news? 

There are strategies like trusts, gifting, and charitable donations that can help reduce the size of your taxable estate.

If estate planning is on your mind, take a look at our article The Secret Strategies the High Net Worth Use to Maximize Wealth in Uncertain Times. You’ll find actionable advice that could save your family millions in taxes.

Annual Gift Exclusion

The annual gift exclusion for 2025 has been bumped to $19,000​. This means you can give up to this amount to any number of people this year without incurring gift taxes. 

If you’re already maxing out your estate tax exemption, consider using the annual exclusion as a way to pass wealth to your loved ones.

Also, remember that making payments directly to educational institutions and medical providers/ institutions do not count toward the annual exclusion.  

Actionable Strategies for High Earners

1. Harvest Investment Losses

If your portfolio has underperforming assets, now may be the time to consider tax-loss harvesting. This involves selling losing investments to offset gains, reducing your tax liability. Even if you’re in the top income bracket, this strategy can save you a considerable amount.

2. Maximize Retirement Contributions

For high earners nearing retirement, maximizing retirement contributions is a powerful tool for reducing taxable income and saving for the future. Contributing to a 401(k), IRA, or SEP IRA allows you to defer taxes on contributions and investment gains until withdrawal. Be sure to take advantage of any employer matching, as this is essentially free money.

3. Charitable Giving

For those who are charitably inclined, 2025 is an excellent time to leverage donations to reduce your taxable income. By donating appreciated assets or setting up a donor-advised fund (DAF), you can receive a charitable deduction and potentially avoid capital gains taxes.

What’s next, Plan Ahead for 2025

The 2025 tax updates offer both challenges and opportunities for high earners. Whether it’s managing your Medicare premiums, capital gains, or estate planning, proactive steps can ensure you stay ahead of the tax curve. 

Don’t wait until the end of the year to start planning; now is the perfect time to assess your financial strategies.

For more insights and personalized advice, visit our Insights page, or check out Maximizing Your After-Tax Returns for more advanced strategies tailored to high-earners like you.

By staying informed and taking a strategic approach, you can make the most of your financial situation in 2025 and beyond.

What’s holding you back from making a plan?