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IRS tax bracket changes in 2024 may result in bigger paychecks, what are they?

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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.

Representational Image(Pixabay)
Representational Image(Pixabay)

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%.

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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

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