Main takeaways:
- The federal income tax brackets are updated annually by the IRS to reflect inflation.
- Both the standard deduction and the tax rates are rising significantly in 2024.
- You will benefit from these improvements in terms of a decreased tax burden if your income hasn’t kept up with inflation.
To ensure that the tax rates are applied to the same amount of spending power, the IRS adjusts the US tax brackets for inflation each year. The 2024 numbers were recently released, and as 2023 saw historically high levels of inflation, the income ranges corresponding to each marginal tax rate are rising significantly for the 2024 tax year.
This article explains the various filing statuses’ 2024 U.S. tax brackets, how the tax bracket’s function is, and—most importantly—why your taxes could actually decrease in 2024.
Single filers
| Marginal Tax Rate | Taxable Income |
|---|---|
| 10% | $11,600 or less |
| 12% | $11,600 – $47,150 |
| 22% | $47,150 – $100,525 |
| 24% | $100,525 – $191,950 |
| 32% | $191,950 – $243,725 |
| 35% | $243,725 – $609,350 |
| 37% | $609,350 and higher |
Married filing jointly
| Marginal Tax Rate | Taxable Income |
|---|---|
| 10% | $23,200 or less |
| 12% | $23,200 – $94,300 |
| 22% | $94,300 – $201,050 |
| 24% | $201,050 – $383,900 |
| 32% | $383,900 – $487,450 |
| 35% | $487,450 – $731,200 |
| 37% | $731,200 and higher |
Heads of household
| Marginal Tax Rate | Taxable Income |
|---|---|
| 10% | $16,550 or less |
| 12% | $16,550 – $63,100 |
| 22% | $63,100 – $100,500 |
| 24% | $100,525 – $191,950 |
| 32% | $191,950 – $243,725 |
| 35% | $243,725 – $609,350 |
| 37% | $609,350 and higher |
Married filing separately
| Marginal Tax Rate | Taxable Income |
|---|---|
| 10% | $11,600 and under |
| 12% | $11,600 – $47,150 |
| 22% | $47,150 – $100,525 |
| 24% | $100,525 – $191,950 |
| 32% | $191,950 – $243,725 |
| 35% | $243,725 – $365,600 |
| 37% | $365,600 and higher |
Data source: IRS.gov
First off, your taxable income is not the same as your gross, or total, income, as indicated by the figures in the tables above. The amount of money remaining after deducting any allowed adjustments and deductions is your taxable income. For instance, your taxable income in 2024 would be $78,400 if you were single, earned $100,000, deducted $7,000 for retirement contributions, and took advantage of the $14,600 standard deduction.
These tax bands are marginal to start with. Think about the single person in the aforementioned scenario, who has taxable income of $78,400. The following is how their tax would be computed based on the tax brackets shown in the chart for single filers:
- 10% of the first $11,600
- 12% of the amount between $11,600 and $47,150
- 22% on the portion of taxable income that exceeds $47,150
Apart from the adjustments made to the tax rates, there is also an increase in the standard deduction. The standard deduction for married couples in 2024 will be $29,200, an increase of $1,500 from 2023. The standard deduction for heads of household and singles in 2024 will be $21,900 and $14,600, respectively.
The maximum earned income tax credit (EITC) and the alternative minimum tax exemption are two major tax items that are also yearly adjusted for inflation. Both of these things are growing considerably.
The IRS raised the 2024 tax rates to account for inflation, which stayed high for an additional year, as it does every year. Additionally, a decreased tax burden might result for a lot of people.
The theory is that your effective tax rate should have changed very little, if at all, if your income has remained relatively stable in relation to inflation. However, the truth is that a lot of earnings didn’t. The greater income ranges that correlate to each marginal tax rate in 2024 may result in lower federal income taxes for you if your income has not increased.
Think about this instance: Assume that in 2023 you will be married and have a salary of $100,000. Your taxable income is reduced to $72,300 when you use the married couples filing jointly 2023 standard deduction of $27,700. Without getting into the arithmetic, you would owe $8,236 in federal taxes for 2023 based on the tax brackets for 2023.
Let’s now assume that in 2024 you make $100,000 more. The larger standard deduction in 2024 would, among other things, lower your taxable income to $70,800. Additionally, you would owe $8,032, or more than $200 less than in 2023, thanks to the generally more advantageous tax levels.
To be quite clear, my goal is for your income to rise in 2024 in addition to inflation. However, the argument remains that there may be some tax relief. Last but not least, it’s critical to remember that all of these adjustments apply to the 2024 tax year or the tax return you will submit in 2025.
2024 Federal Income Tax
April 15 is the date for filing federal taxes in 2024. The dates for filing state tax returns differ, so make sure to check the website of your state government. Tax deadlines are frequently kept in convenient lists that you may read on tax preparation websites like TurboTax.
You’re not alone if you find tax filing difficult. Your taxes get more complex the more financial pools you participate in. Some people enlist the assistance of experts. While some people do their taxes by hand, others utilize tax preparation software.
Regardless of how you file, you may use this brief guidance to help you navigate the process. To help you file taxes more effectively in 2024, follow along.
Throughout the year, tax forms are sent to you by organizations and employers. Forms are now distributed by email in addition to the postal service. Not sure where yours originated? Look through your email and mailbox for any pertinent tax paperwork.
Some of the most popular tax forms are listed below:
- W-2: Employers provide the W-2 to both full- and part-time workers.
- 1099s: 1099s are sent to independent contractors, freelancers, and non-wage workers. Different 1099s are sent by organizations, customers, and companies to record non-wage income, such as dividends from investments or interest from savings accounts.
- 1095-A: This document is required if you registered in a qualifying health plan in order to ensure that you are credited with the appropriate amount of “advanced premium tax credits,” which are tax credits that many Americans receive to assist with the cost of insurance.
- 1098: If appropriate, mortgage lenders send homeowners a 1098.
You may pay for advice or file federal taxes directly with the IRS for free. A lot of people choose to file using tax preparation software or with the help of tax experts. Some decide on both.
Every choice has advantages and disadvantages.
