IRS Sets New Tax Brackets and Standard Deduction for 2024

IRS Tax Brackets

The IRS has recently announced higher inflation adjustments for the 2024 tax year, bringing potential benefits to American taxpayers. These adjustments aim to prevent “bracket creep,” a phenomenon in which individuals are pushed into higher-income brackets due to inflation, despite their purchasing power remaining relatively unchanged. This year, the tax brackets will be shifting higher by approximately 5.4%, potentially resulting in increased take-home pay for millions of workers across all income brackets.

Standard Deduction

The standard deduction is a crucial element that reduces the amount of income individuals must pay taxes on. The IRS has raised the standard deduction for the 2024 tax year, providing taxpayers with a welcome boost. For married couples filing jointly, the standard deduction will rise to $29,200, a 5.4% increase from the previous year’s $27,700. Similarly, for individuals, the new maximum standard deduction will be $14,600, up from $13,850. Heads of households will also benefit from a jump in their standard deduction, which will increase to $21,900 in 2024, up from $20,800.

Tax Brackets for Single Individuals

The IRS is adjusting the tax brackets for both single individuals and married filers across various income spectrums. These adjustments ensure that taxpayers are not unfairly burdened by inflation. The top tax rate will remain at 37% in 2024. Here are the new tax brackets for single individuals:

Taxable Income Tax Rate
Up to $11,600 10%
Over $11,600 12%
Over $47,150 22%
Over $100,525 24%
Over $191,950 32%
Over $243,725 35%
Over $609,350 37%

Tax Brackets for Joint Filers

For married couples filing jointly, the IRS has also adjusted the tax brackets to reflect inflation and ensure fairness. Here are the new tax brackets for joint filers:

Taxable Income Tax Rate
Up to $23,200 10%
Over $23,200 12%
Over $94,300 22%
Over $201,050 24%
Over $383,900 32%
Over $487,450 35%
Over $731,200 37%

Other Tax Provisions

In addition to the adjustments made to tax brackets and standard deductions, the IRS has also increased the thresholds for several other tax provisions. These changes reflect the evolving economic landscape and aim to accommodate individuals and families in various financial situations.

The earned income tax credit (EITC) is one such provision that has seen an increase. Families with three or more qualifying children can now receive up to $7,830, up from $7,430 in the previous tax year. This increase in the EITC amount provides additional support to families with dependents.

Furthermore, employees can now contribute more to their health flexible spending accounts (FSAs). The maximum contribution limit has risen by approximately $150, allowing individuals to set aside up to $3,200 for eligible healthcare expenses.

See first source: Fox News

FAQ

What are the IRS 2024 tax adjustments, and why were they made?

The IRS has made tax adjustments for the 2024 tax year to account for inflation and prevent “bracket creep,” where individuals are pushed into higher-income brackets due to inflation. These adjustments aim to ensure that taxpayers are not unfairly burdened by rising costs of living.

How will the standard deduction change for the 2024 tax year?

The standard deduction will increase for the 2024 tax year. For married couples filing jointly, it will rise to $29,200, a 5.4% increase from the previous year’s $27,700. For individuals, the new maximum standard deduction will be $14,600, up from $13,850, and heads of households will see an increase to $21,900, up from $20,800.

Are there any other tax provisions that have been adjusted for 2024?

Yes, several other tax provisions have been adjusted to reflect the changing economic landscape. For example, the earned income tax credit (EITC) has increased, providing more support to families with three or more qualifying children, with the maximum credit rising to $7,830. Additionally, the contribution limit for health flexible spending accounts (FSAs) has increased by approximately $150, allowing individuals to set aside up to $3,200 for eligible healthcare expenses.

How do these adjustments benefit taxpayers?

These adjustments benefit taxpayers by preventing them from being pushed into higher tax brackets due to inflation. As the cost of living increases, these changes ensure that taxpayers can maintain their purchasing power and potentially enjoy increased take-home pay.

Featured Image Credit: Photo by Kelly Sikkema; Unsplash – Thank you!

Picture of Cassandra Graham

Cassandra Graham

Cassandra has been reporting on the successes and failures of small businesses after she started a lucrative small business in college. Besides writing, she enjoys flying drones, playing board games, and skiiing.

RECENT ARTICLES

TRENDING AROUND THE WEB

People who grew up feeling unattractive usually develop these 7 traits as adults

People who grew up feeling unattractive usually develop these 7 traits as adults

Global English Editing

7  behaviors you probably don’t realize cause resentment in your relationship

7 behaviors you probably don’t realize cause resentment in your relationship

Small Business Bonfire

If you want to stay close to your grandchildren, say hello to these 8 behaviors

If you want to stay close to your grandchildren, say hello to these 8 behaviors

Baseline

People who grew up with very little affection tend to develop these 10 traits later in life (according to psychology)

People who grew up with very little affection tend to develop these 10 traits later in life (according to psychology)

Baseline

8 subtle signs your partner doesn’t genuinely have your back, says psychology

8 subtle signs your partner doesn’t genuinely have your back, says psychology

Global English Editing

10 things highly successful people never do after work

10 things highly successful people never do after work

Small Business Bonfire