What the New 2024 Tax Brackets Mean for You

Each year, the IRS adjusts tax brackets and the standard deduction to keep pace with inflation, helping taxpayers avoid “bracket creep” — the phenomenon where inflation pushes income into higher tax brackets, resulting in higher taxes despite no real increase in purchasing power. For the 2024 tax year, these inflation adjustments are particularly notable, with the IRS increasing income thresholds for each tax bracket.

Key Tax Bracket Changes for 2024

In 2024, the IRS is increasing the income thresholds for each of the seven marginal tax rates — 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These shifts are intended to help taxpayers stay in lower tax brackets as their incomes rise with inflation.

For instance, married couples filing jointly will now remain in the 12% tax bracket for incomes up to $94,300, a significant increase from the $89,450 threshold in 2023. Similarly, the 22% bracket for the same group will apply to incomes between $94,301 and $201,050, compared to $89,451 and $190,750 in 2023. This means that couples can now shelter an additional $5,000 of income from the higher tax rate.

For single filers, the income limit for the 12% bracket has also increased, from $44,725 in 2023 to $47,150 in 2024. These increases are designed to prevent taxpayers from paying higher taxes purely due to inflation-related pay raises.

The Standard Deduction Boost

Along with bracket changes, the standard deduction has also risen for 2024, providing more tax relief. Married couples filing jointly can now deduct $29,200, compared to $27,700 in 2023. Single filers will see their standard deduction increase from $13,850 to $14,600.

What This Means for Taxpayers

These changes could result in slightly lower tax bills for many Americans. If your income hasn’t significantly increased in 2024, you may benefit from staying in a lower bracket or enjoying a bigger standard deduction. For those who received cost-of-living raises, these adjustments will help prevent you from getting taxed at a higher rate.

It’s essential to keep an eye on these annual adjustments to ensure you’re taking full advantage of available tax savings. Consult a tax professional to understand how these changes impact your specific financial situation.

In conclusion, the IRS’s 2024 inflation adjustments are a welcome change for many taxpayers. By pushing income thresholds higher, the IRS is helping Americans avoid bracket creep and keep more of their hard-earned money.