IRS unveils 2024 Tax bracket adjustments: What does this mean for taxpayers?
IRS) has recently released its annual inflation adjustments report, bringing to light changes in income tax brackets and standard deductions for the 2024-2025 tax season. This alteration arrives as a response to inflation and the aim to mitigate «bracket creep,» a situation in which inflation shoves taxpayers into higher brackets without genuine income increments.
Tax Bracket Adjustments for 2024
The IRS's adjustments involve a 5.4% increase in income thresholds, influencing the division of earners across the federal income tax rates. This hike, while lower than last year's notable 7% rise, stands significantly above previous years when inflation was subdued at 3.7%.
Understanding Federal Income Tax Rates
The federal income tax rates for 2024 remain based on the 2017 Tax Cuts and Jobs Act, standing at seven rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These rates work on a progressive scale, meaning higher incomes incur higher tax rates.
Implications for Taxpayers in 2024
For individuals filing taxes as single entities, the 10% rate will apply to those with taxable income up to $11,600. The top bracket of 37% is reserved for individuals earning above $609,350.
Joint filers will see the lowest rate of 10% for taxable incomes up to $23,200, while the highest bracket of 37% applies to couples earning $731,200 or more.
2024 Standard Deductions
Standard deductions for the 2024 tax year exhibit significant changes. For married couples filing jointly, the standard deduction will increase to $29,200, up from $27,700 in the previous tax year. Single taxpayers will enjoy a standard deduction of $14,600, up from $13,850. Heads of households will witness an increase to $21,900 compared to the $20,800 in 2023.
2024 Tax
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