The IRS on Thursday announced a higher inflation adjustment for the 2024 tax year, potentially giving Americans a chance to increase their take-home pay next year.
Higher limits for federal income tax brackets and the standard deduction are intended to prevent a phenomenon known as “bracket creep,” which occurs when taxpayers are pushed into higher income brackets even though their purchasing power is essentially unchanged due to high inflation.
The IRS makes such adjustments every year, but during inflation, the increases are more significant and affect taxpayers.
This year, the tax bracket changed higher by about 5.4%.
A higher threshold at which tax rates come into effect could mean savings for millions of workers across all income groups.
Here are the changes announced by the IRS. The inflation adjustment element will be applied in the 2024 tax year, meaning returns are filed in 2025.
Standard deduction
The standard deduction, which reduces the amount of income you must pay taxes on, is claimed by the majority of taxpayers.
The IRS announced higher inflation adjustments for the 2024 tax year on Thursday.AP
It will increase to $29,200, up from $27,700 in 2024 for married couples filing jointly, amounting to 5.4%. For individuals, the new maximum is $14,600 for 2024, up from $13,850, the IRS said.
Heads of households will see their standard deduction jump to $21,900 in 2024, up from $20,800.
Tax brackets for single individuals:
The IRS increased the tax bracket by about 5.4% for individual and married filers across different income spectrums. The top tax rate remains at 37% in 2024.
- 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
The IRS increased the tax bracket by about 5.4% for individual and married filers.Getty Images
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
Other tax provisions
The IRS also raised the threshold for several other tax provisions, including the amount of the earned income tax credit, with families now eligible to receive $7,830 if they have three or more qualifying children. That’s up from $7,430 for the 2023 tax year.
Employees can also contribute more to their health flexible spending account, with maximum contributions increasing by about $150 to $3,200.
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Source: thtrangdai.edu.vn/en/
