The IRS just announced today that they have adjusted the tax income brackets for 2024 to adjust for inflation.
The standard deduction is increasing to $29,200 for married couples filing together and $14,600 for single taxpayers.
There are also changes to the alternative minimum tax, estate tax exemption, earned income tax credit, and flexible spending account limits, among others.
What does this mean for you? The adjusted tax brackets should make it simpler for you to figure out how much you owe. It should also make it easier and faster for the IRS to process tax returns, and it will allow you to pay less in taxes.
Let’s get into a little more detail about these tax bracket changes so you’ll know what to expect next year.
How Do Tax Brackets Work in the U.S.?
The U.S. has what is called a graduated or progressive tax system in place. That’s the opposite of a flat tax rate or system.
You’re taxed at different rates depending on how much you make each year. Currently, the rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These are referred to as brackets or thresholds.
Higher Standard Deduction
The standard deduction will also increase in 2024, rising to $29,200 for married couples filing jointly, up from $27,700 in 2023. Single filers may claim $14,600, an increase from $13,850.
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