Tax Regulations and Rates in 2025

Tax regulations and rates evolve annually, impacting both employers and businesses as governments adapt to shifting economic conditions. Companies across all industries must navigate these ever-changing rules to remain compliant, ethical, and secure.

To help you stay ahead, we’ve outlined the most significant regulatory updates set to shape 2025.

New Tax Rates for Employers

FICA
2025 will see no change to the FICA tax rate, this is the contribution to Social Security and Medicare that’s split between employer and employee.

Social Security Wage Base
While there is no change to the tax rate, the Social Security Wage Base has risen from $168,600 to $176,100, which increases the maximum individual contribution by 4.45%.

Self-Employment Tax
The self-employment tax rate remains unchanged at 15.3%, applying to the first $166,800 of your net income.

FSA’s and HSA’s
The maximum contribution to a health flexible spending account (FSA) has increased to $3,300, a $250 increase from 2024. Health savings account (HSA) annual contributions max out at $4,300 for single coverage, a $150 increase from 2024, and $8,550 for family coverage, a $250 increase from 2024.

Tax Changes for Individuals

Tax Brackets
Modest adjustments have been made for all brackets due to inflation.

Standard Deduction
People can lower their taxable income by taking the standard deduction. This year, the standard deduction for individual filers will increase to $15,000, a $500 increase from 2024. Joint filers will be able to claim $30,000 in 2025, an $800 increase over 2024.

Social Security Benefits
Social Security payments will increase by 3.2% in 2025, calculated as a cost-of-living adjustment.

Gift Tax
In 2025, the annual gift tax exclusion will increase to $19,000 per recipient, giving individuals an extra $1,000 of gifting power compared to 2024. This means you can give up to $19,000 to any person without needing to file a gift tax return.

Iowa Individual Income Tax Updates
For 2025, Iowa will implement a flat individual income tax rate of 3.8%, replacing all income tax brackets. Additionally, the interest rate for overdue payments will be 10% annually.

Navigating these regulations can be tricky, but working with a professional can help ensure you're always on the right track. Contact Future Systems today.