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IRS tax bracket changes in 2024 may result in bigger paychecks, what are they?
The latest tax changes could potentially give Americans a chance to take home bigger paychecks, here's what the new tax brackets and standard deductions are
Internal Revenue Service (IRS) announced several key changes last month as part of its 2024 inflation adjustments. Although the income tax rates will remain the same for the next two tax years, higher federal tax brackets and standard deductions are set to take effect beginning January next year. This increase is intended to avoid bracket creep, which is a situation where inflation pushes income into higher tax brackets. The latest tax changes could potentially give Americans a chance to take home bigger paychecks.
What are the tax changes in 2024?
IRS generally announces tax changes annually. However, in cases of significantly higher inflation, the increases are more impactful for taxpayers. Higher tax brackets could allow savings for millions of Americans across all income slabs. In 2023, income tax brackets jumped by 7 per cent. In 2024, the tax brackets will shift higher by about 5.4%.
2024 standard deductions
According to the IRS, the standard deductions in 2024 will rise to $29,200, up from $27,700 for married couples filing jointly, amounting to a 5.4% bump. For individuals or married couples filing separately, the new maximum will be $14,600, up from $13,850. Meanwhile, for the head of household, the new rate is $21,900, in contrast to $20,800 in 2023.
The following changes will apply to the returns due in 2025:
2024 tax brackets for single filers
| Taxable Income | Tax Due |
|---|---|
| Under $11,600 | 10% of taxable income |
| Above $11,600 but under $47,150 | $1,160 plus 12% of the excess over $11,600 |
| Above $47,150 but under $100,525 | $5,426 plus 22% of the excess over $47,150 |
| Above $100,525 but under $191,950 | $17,168.50 plus 24% of the excess over $100,525 |
| Above $191,950 but under $243,725 | $39,110.50 plus 32% of the excess over $191,150 |
| Above $243,725 but under $609,350 | $55,678.50 plus 35% of the excess over $243,725 |
| Above $609,350 | $183,647.25 plus 37% of the excess over $609,350 |
2024 tax brackets for married but filing separately
| Taxable Income | Tax Due |
|---|---|
| Under $11,600 | 10% of taxable income |
| Above $11,600 but under $47,150 | $1,160 plus 12% of the excess over $11,600 |
| Above $47,150 but under $100,525 | $5,426 plus 22% of the excess over $47,150 |
| Above $100,525 but under $191,950 | $17,168.50 plus 24% of the excess over $100,525 |
| Above $191,950 but under $243,725 | $39,110.50 plus 32% of the excess over $191,150 |
| Above $243,725 but under $365,600 | $55,678.50 plus 35% of the excess over $243,725 |
| Above $365,600 | $98,334.75 plus 37% of the excess over $365,600 |
2024 tax brackets for married but filing jointly
| Taxable Income | Tax Due |
|---|---|
| Under $23,200 | 10% of taxable income |
| Above $23,200 but under $94,300 | $2,320 plus 12% of the excess over $23,200 |
| Above $94,300 but under $201,050 | $10,852 plus 22% of the excess over $94,300 |
| Above $201,050 but under $383,900 | $34,337 plus 24% of the excess over $201,050 |
| Above $383,900 but under $487,450 | $78,221 plus 32% of the excess over $383,900 |
| Above $487,450 but under $731,200 | $111,357 plus 35% of the excess over $487,450 |
| Above $731,200 | $196,669.50 plus 37% of the excess over $731,200 |
