Texas Residents May See Larger Paychecks in 2025, Even Without a Raise

As 2024 winds down, there’s good news for Texas residents looking ahead to 2025 – your paycheck might get a bit bigger, even if you don’t receive a raise. Thanks to changes from the IRS, you could see a little more take-home pay next year.

Lately, many families have felt like they’re stretching every dollar just to keep up with everyday costs. Groceries, gas, and bills all seem to cost more than they used to, and paychecks just don’t seem to go as far. Parents are looking for ways to cut back, whether that’s cooking at home more, cutting down on extras, or finding deals whenever possible. Times have been tough, and a lot of families are doing whatever they can to make ends meet and take care of what really matters.

Each year, the IRS adjusts tax brackets and the standard deduction to keep up with inflation. For 2025, these adjustments include a 2.7% increase in standard deductions and shifts in individual tax brackets. These changes are smaller than in previous years, but they’re still expected to help Americans keep a bit more of their earnings.

Here’s how it works: when the IRS adjusts tax brackets, it helps prevent something called “bracket creep.” Bracket creep happens when inflation bumps your income into a higher tax bracket, leading you to pay more taxes, even though the value of your paycheck hasn’t increased. The IRS updates tax brackets to avoid this, which can result in less tax being withheld from each paycheck. In short, a bit more money stays in your pocket each pay period.

Here is an example via NEXSTAR...

"Say, for example, you are making $101,000 this year. You fall into the third tax bracket, meaning you’re taxed 10% on the first $11,600 you earn; 12% on the chunk between $11,601 and $47,149; then 22% on what you earn between $47,150 and $100,524; and 24% on every dollar above that."

While this might not feel like a big raise, it’s designed to balance out inflation’s effects. So, if you notice a little extra in your paycheck in 2025, remember that it’s not exactly “extra” money; it’s the IRS’s way of helping you keep up with rising prices.

According to recent reports, inflation in 2024 is down slightly, at about 2.4%, compared to previous years. This dip means the IRS adjustments aren’t as large as in recent years, but they’re still enough to make a positive impact on your take-home pay.