**IRS Announces 2025 Adjustments to 401(k) and Retirement Contributions**

The Internal Revenue Service (IRS) has recently announced that individuals will be able to contribute more to their 401(k) retirement plans in 2025. The contribution limit has been increased to $23,500, up from the current $23,000 for 2024. This adjustment is part of the annual cost-of-living updates provided by the IRS for various pension plans and retirement accounts.

In addition to 401(k) plans, the contribution limits for 403(b) plans and the federal government's Thrift Savings Plan will also rise to $23,500 in 2025, marking a $500 increase from 2024. However, not all retirement accounts saw changes. The contribution limit for Individual Retirement Accounts (IRAs) will remain steady at $7,000, and the IRA catch-up contribution limit for individuals aged 50 and over will also stay unchanged at $1,000 for 2025.

The IRS also announced revisions to the standard deduction rates for 2025. Single taxpayers and married individuals filing separately will see their standard deduction increase to $15,000, a rise of $400 from 2024. For married couples filing jointly, the standard deduction will be $30,000, up by $800, while heads of households will benefit from a $22,500 deduction, an increase of $600 from the previous year. Additionally, income thresholds across all seven federal tax brackets have been adjusted upward.

In a related development, the Social Security Administration recently mandated a 2.5% cost-of-living adjustment for benefit recipients starting in January. This adjustment will result in an average monthly increase of over $50 for millions of beneficiaries, representing the smallest annual hike in Social Security benefits since 2021. Despite the easing of inflation from its peak levels during the pandemic, some advocates for older Americans express concern that the modest increase may not sufficiently protect retirees financially.