The IRS has revealed the annual inflation adjustments impacting more than 60 tax provisions for the upcoming 2024 tax year. This includes a bump in the standard deduction and fresh income limits for seven tax brackets.
In a statement on November 9, the federal agency announced that a series of fresh annual inflation adjustments will have an impact on the 2024 tax year, potentially leading to an increase in your paycheck.
Each year, the IRS adjusts tax rates to consider the rising cost of living. With persistent high price pressures, many Americans, feeling the strain of inflation, are hoping for some relief at tax time.
The standard deduction, commonly utilized by individuals who don’t itemize their taxes, raises the amount of income people can earn before they have to hand some of it over to the government through taxes.
According to the latest annual inflation adjustments from the IRS, the standard deduction for married couples filing jointly in 2024 is now $29,200, showing a $1,500 increase or 5.4 percent compared to the previous year. This year’s rise is more modest than the previous year’s bump of $1,800, which was a 7 percent jump, reflecting a somewhat slower pace of inflation compared to the eye-watering levels experienced last year.
Single taxpayers and those married but filing separately can expect the standard deduction to increase to $14,600 in 2024, a rise of $750. Meanwhile, heads of households will see their standard deduction for the tax year 2024 at $21,900, marking a $1,100 increase from 2023—an uptick of 5.4 percent, though slightly less than last year’s 7.4 percent bump.
Although the percentage-based tax rates for the tax year 2024 stay the same, there have been adjustments to the income thresholds at which they come into effect.
The highest tax rate, known as the highest tax rate based on income, remains at 37 percent for individual single taxpayers with incomes greater than $609,350, or $731,200 for married couples filing jointly.
The lowest rate, set at 10 percent, is applicable to single individuals earning $11,600 or less and married couples with an income of $23,200 or below.
The other rates are:
- 35 percent for incomes over $243,725 (or $487,450 for married couples filing jointly),
- 32 percent for incomes over $191,950 (or $383,900 for married couples filing jointly),
- 24 percent for incomes over $100,525 (or $201,050 for married couples filing jointly),
- 22 percent for incomes over $47,150 (or $94,300 for married couples filing jointly),
- 12 percent for incomes over $11,600 ($23,200 for married couples filing jointly).
In total, the income limits for the seven tax brackets have seen a 5.4 percent increase for the 2024 tax year in comparison to the previous year.
Share your thoughts by scrolling down to leave a comment.