Here Are the New IRS Tax Brackets for 2024 — What Does The Change Mean For You?
Written by
Adam Palasciano
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Each year, the IRS evaluates income tax brackets and adjusts them accordingly based on inflation. According to Fox Business, tax brackets have shifted higher by 5.4% in 2024 for both single and joint filers. Standard decisions also took effect at the beginning of January which will, in many cases, increase American’s take-home pay for 2024.
The IRS adjusts tax brackets annually to avoid what is known as “bracket creep.” This happens when taxpayers get pushed into a higher income bracket even though their purchasing power is virtually unchanged due to the effects of inflation on everyday expenses. As inflation has come down, it remains higher than the Federal Reserve’s target of 2%. As a result, the shift in income brackets is more significant for 2024.
New IRS Tax Brackets for 2024
Here are the updated tax brackets for 2024, as per the IRS’ official announcement this past November. It’s worth noting that the top tax rate remains 37% for 2024.
Tax brackets for single individuals:
- 10%: Taxable income up to $11,600
- 12%: Taxable income over $11,600
- 22%: Taxable income over $47,150
- 24%: Taxable income over $100,525
- 32%: Taxable income over $191,950
- 35%: Taxable income over $243,725
- 37%: Taxable income over $609,350
Tax Brackets For Joint Filers:
- 10%: Taxable income up to $23,200
- 12%: Taxable income over $23,200
- 22%: Taxable income over $94,300
- 24%: Taxable income over $201,050
- 32%: Taxable income over $383,900
- 35%: Taxable income over $487,450
- 37%: Taxable income over $731,200
Standard Deduction And Tax Credits Increased
In addition to the 5.4% increase across income tax brackets, the IRS has also increased the standard deduction and several key tax credits.
The standard deduction is taken by a majority of taxpayers and ultimately reduces the amount of income on which taxes are owed. For individuals, it will rise to $14,600 in 2024, up from $13,850 in 2023. For married couples filing jointly, it will rise to $29,200 for 2024, up from $27,700 in 2023. Those filing as heads of household will see their standard deduction increase to $21,900 for 2024, up from $20,800 in 2023.
The IRS has also increased the thresholds on several tax provisions such as the earned income tax credit. Families are now eligible to receive $7,830 if they have three or more qualifying children claimed as dependents on their tax return. That is up from $7,430 in 2023.
Limits on employee contributions to Health flexible spending (HSA) accounts are also up. The maximum contribution has risen to $3,200 for 2024, up from $3,050 in 2023.
Overall, the majority of Americans should see some tax relief with larger paychecks through 2024 which should help with affording the elevated cost of everyday expenses. It remains to be seen how much inflation will cool in 2024, which will dictate tax bracket adjustments for 2025.
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