What is the 125% rule in electrical?

The 125 percent rule means circuit parts serving a continuous load get sized at 125 percent of that load. A continuous load is anything expected to run three hours or more, per NEC 210.19 and 210.20.

So a 16 amp continuous heater needs conductors and a breaker rated for 20 amps. The margin keeps breakers and terminations from cooking at their exact limit for hours.

Motors get the same treatment from a different article: NEC 430.22 sizes motor branch conductors at 125 percent of the motor's table full-load current, not the nameplate.

It is the mirror image of the 80 percent rule. Saying a breaker should carry only 80 percent continuously is the same math read backwards.

The circuit ampacity calculator applies the 125 percent factor for you and shows the article that requires it.