Inflation has been eating away at Americans’ wallets throughout this year, and the IRS is changing its federal income tax bracket thresholds accordingly.
The IRS revealed its tax inflation adjustments for tax year 2024 on Thursday. That means these aren’t the rates related to income taxes you’ll pay during the upcoming filing season (those are technically your rates for 2023). taxes) — these are the rates you will pay in 2025 based on the amount you earn next year.
Tax bracket adjustments are made annually by the IRS; they are announced in the autumn alongside changes to other tax provisions and standard deductions. Inflation has not been as bad this year as last – it peaked at 9.1% in June 2022 and is now at 3.7% – but income thresholds continue to see a considerable increase.
All told, the IRS is making changes to more than 60 tax provisions for 2024, including a 5% increase in the standard deduction.
New tax brackets for 2024
Not everyone pays the same amount of taxes. The IRS determines how much you’ll pay each year using a graduated-rate income tax system.
This year, the lowest rate is 10% for single-deposit individuals earning up to $11,600 in 2024. This is up from the threshold of $11,000 for 2023. The rate the highest is 37%, for single-deposit individuals earning more than $609,350. (compared to $578,125 last year).
Graduated tax brackets are based on income and determine how much each portion of your income is taxed. The first $11,600 of a filer’s income is taxed at 10%. The next $35,500 is taxed at 12%, and so on.
None of the seven tax rates that make up the progressive brackets have changed since last year, although the thresholds themselves have been adjusted upward. Here are the tax brackets for single filers in 2024:
- ten%: $0 to $11,600
- 12%: $11,600 to $47,150
- 22%: $47,150 to $100,525
- 24%: $100,525 to $191,950
- 32%: $191,950 to $243,725
- 35%: $243,725 to $609,350
- 37%: $609,350 and more
What is the standard deduction for 2024?
The standard deduction is a predetermined amount of income that is not taxed by the federal government. Alternatively, you can itemize your deductions to potentially save more that the standard deduction; However, after a tax overhaul in 2017, the vast majority of taxpayers choose to benefit from the standard deduction.
For single filers, the standard deduction for 2024 will be $14,600, up from $13,850 this year. For married couples filing jointly, the standard deduction will be $29,200.
For more information on inflation adjustments, visit IRS website.
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