November 25, 2023
Starting next year – you may start seeing a little more money in your paycheck.
That’s because the IRS just released the inflation adjustments for income tax brackets for 2024 and changed the standard deduction. And this could be significant for some of you.
First – let me make this clear – this is for the 2024 taxable year. You will file that tax return in 2025, but the changes take effect in January and could show up as lower tax withholding from your paycheck – meaning possibly more take home pay.
Now – every year the IRS adjusts the amount of income tax you pay based on inflation. And because inflation has been so high — the IRS – this year — for the most part—has adjusted the brackets so if you’re making more money you may not be moved into a higher tax bracket. There’s actually a term for that – it’s called bracket creep — the government adjusts the income thresholds in the tax brackets to account for annual cost-of-living pay increases at your job. Without those adjustments to the brackets, you may get pushed into a higher tax bracket even though your standard of living hasn’t changed.
Now – I know that sounds confusing – so maybe if I show you the actual numbers it’ll make a little more sense.
Let’s take this example — if you are single and made 45-thousand dollars in 2023 your highest taxable rate would be 22-percent. But in 2024 if you make that same 45-thousand dollars your highest taxable rate would be 12-percent. See – that’s a big difference.
All of the tax brackets for married filers and for heads of household and married filing separately – they’ve all shifted.
Here is a chart I put together based on the new brackets. And where your income will fall in 2024 – this is for heads of household, single and married filing jointly. All of the brackets have changed to the taxpayer’s benefit. If you want me to email the documents from the IRS out to you – I will do that in my news girl news roundup email tonight – so make sure you sign yourself up.
The other thing the IRS did was increase the standard deduction for the 2024 taxable year. It will be $29,200 for married couples filing jointly – that’s an increase of $1500. The standard deduction increases $14,600 for single taxpayers – that’s up $750 from last year and increases to $21,900 dollars for heads of household – that’s an increase of $1100 bucks from last year.
Read more from the IRS here.
Read the actual tax brackets here.
