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Military Finances 201: 2025 by the Tax Numbers Thumbnail

Military Finances 201: 2025 by the Tax Numbers

Taxes

As the calendar clicks over to 2025, you'll start completing your 2025 tax return (that's right, I said 2025. Your 2024 tax return is done...you just have to write it down). And to accomplish that you need to know the rules. So, let's take a look.

The Good Stuff

In 2025 you'll be able to contribute more, in most cases, to your retirement accounts. Here are some of the main ones

  • The employee deferral limit for most employer sponsored plans (401(k), 403(b), TSP, etc) increased from $23,000 to $23,500
  • The normal catch-up contribution to these plans remains at $7,000 for a total amount of $30,500 for those age 50 or older
  • There is an additional catch-up limit for those aged 60 - 63 in 2025. These folks will be able to contribute $11,250 in 2025
  • The maximum deferral to SIMPLE plans is $16,500, up from $16,000. Catch-up contributions remain at $3,500 with an increase for those aged 60 - 63
  • IRA (Roth and Traditional) contribution limits remain unchanged at $7,000 with a $1,00 catch-up contribution for those 50 and older


The Other Stuff

There are other changes you need to be aware of.

  • The income limits (AGI) and phase out range to be able to contribute to a Roth IRA have increased as follows
  • Single: $150,00 - $160,000 (unable to contribute if AGI exceeds $160,000)
  • Married Filing Jointly (MFJ): $236,000 - $246,000
  • Married Filing Separately (MFS): $0 - $10,000
  • If you are covered by a retirement plan at work, your income must be below the following limits (and phase-out) to be able to deduct those contributions
  • Single: $79,000 - $89,000
  • MFJ: $126,000 - $146,000
  • MFS: $0 - $10,000
  • If you aren't covered by a retirement plan at work, but your spouse is the phase out limit for deductible contributions is same as for a Roth IRA. If no one is covered, by a retirement plan at work, there is no income limit to be able to deduct the contributions
  • Standard Deductions have increased
  • Single: $15,000
  • MFJ: $30,000
  • MFS: $15,000
  • Head of Household (HoH): $22,500
  • Medicare premiums (Part B) range from a low of $185 per month to a high of $628.90 per month depending on your income
  • The Social Security Wage Base increases to $176,100 from $168,600 and increase of $7,500. Those above both thresholds will pay an additional $465 in Social Security taxes in 2025.


Military Finances are Different

One of the ways your finances (as a Senior Military Officer or NCO) are different from your civilian counterpart is the preferential tax treatment you receive. But that's not the only way. That's why we think you should work with a financial planner or advisor the works with active and retired military members each and every day. If you'd like to see how we work with people just like you, used the button below to schedule a free initial consultation.

Retired Military Finances 201: The New "Extra-Mega-Special-Bonus Catch-up Contribution"


Retired Military Finances 301: Walking the Roth IRA - AGI Tightrope


Military Finances 101: Happy Birthday! Do You Know What Changed?


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