New income tax brackets for 2024: What are the changes in income thresholds for the 7 categories?
The Internal Revenue Service has released the official tax brackets for the 2024 fiscal year. Here’s a look at what they are to plan ahead for next year.
The Internal Revenue Service has released the official tax brackets along with over 60 tax provisions for the 2024 fiscal year. The adjustment will apply to the seven federal tax brackets as well as the standard deduction that taxpayers can claim when filing.
Every year the Internal Revenue Service adjusts the earnings amounts for each of the tax brackets to account for inflation during the year. The annual increase to the amounts for next year reflected the 5.4 percent increase forecast by Bloomberg Tax & Accounting in September.
Here’s a look at what has changed for 2024.
2024 tax brackets
The seven brackets remain the same next year 10%, 12%, 22%, 24%, 32%, 35% and 37% which were set after the 2017 Tax Cuts and Jobs Act. These will be in place through the 2025 fiscal year, after which time, with no Congressional action, the tax rate will increase for all except the lowest.
The income thresholds for tax brackets are adjusted to reflect inflation or the cost of living. This is based on the Chained Consumer Price Index created by the Bureau of Labor Statistics through continuously tracking the changing price of a basket of goods and consumer purchasing behavior in response to that change.
The annual adjustment is designed to avoid “bracket creep” when people are pushed into a higher income bracket or inflation reduces the value of other deductions or credits. So, for example instead of 10% being applied to the first $11,000 of income as in 2023, it will now be applied to the first $11,600 for a taxpayer filing individually in 2024.
Standard deductions in 2024
Also, the standard deduction will increase in 2024 by $750 to $14,600 for single filer or married but filing separately, by $1,100 to $21,900 for head of households and $1,500 to $29,200 for married taxpayers filing jointly.
An additional standard deduction of $1,950 will apply to those who are either 65 and older or blind, and the amount doubles if both apply to a taxpayer in 2024.
Dependents that can be claimed on another person’s tax return for the 2023 fiscal year are limited to a standard deduction of either $1,300 or your earned income plus $450, whichever is greater. However, the total can’t exceed the basic standard deduction for your filing status.
| Filing status | 2024 | 2023 |
|---|---|---|
| Single filers & Married couples filing separately | $14,600 | $13,850 |
| Married couples filing jointly & surviving spouses | $29,200 | $27,700 |
| Head of Household | $21,900 | $20,800 |
Your filing status could save you extra money
There are five categories of filers and conditions apply to the one you should use to file your taxes. The main determiner is your marital status on 31 December of the year for which you are reporting taxes, that will be the one you use for the entire year. It’s possible that more than one filing status applies to you, so the IRS recommends that you use the filing status that will reduce your tax liability the most.
Five US filing statuses:
- Single: For those who are not married, divorced or legally separated.
- Married Filing Jointly: Married couples can choose to file a joint tax return. Widow(er)s can also use this in the year their spouse died.
- Married Filing Separately (MFS): Married couples also have the choice of filing separately if it is more financially beneficial.
- Head of Household (HoH): The IRS cautions not to choose the by mistake and special rules apply to qualify for this filing status. Generally, this status applies if you are not married and must have paid more than half the cost of keeping up a home for yourself and a qualifying person.
- Qualifying Widow(er) with Dependent Child: This status is similar to married filing jointly. It is applicable for only two years and conditions apply.
For more information check the Dependents, Standard Deduction, and Filing Information in Publication 501.
To help taxpayers determine which filing status applies to them the IRS has an online tool “What Is My Filing Status?”
Income taxes are progressive
The tax brackets are progressive, so if you file as a single filer and have a taxable income of $50,000, you don’t pay 22 percent on the whole of your taxable income. You would pay 10 percent on the first $11,600 ($1,160), 12 percent on the income between $11,600 and $47,150 ($4,266), and then 22 percent on the remaining $2,850 ($627) for a total of $6,053.00 as opposed to $11,000. That amount is $254.50 less than you would be taxed for the same income in 2023.
2024 tax bracket income thresholds
| Tax rate | Single filers & MFS | Married filing jointly | Head of household |
|---|---|---|---|
| 37% | for incomes over $609,350 | for incomes over $731,200 | for incomes over $609,350 |
| 35% | for incomes $243,725 to $609,350 | for incomes $487,450 to $731,200 | for incomes $243,700 to $609,350 |
| 32% | for incomes $191,950 to $243,725 | for incomes $383,900 to $487,450 | for incomes $191,950 to $243,700 |
| 24% | for incomes $100,525 to $191,950 | for incomes $201,050 to $383,900 | for incomes $100,500 to $191,950 |
| 22% | for incomes $47,150 to $100,525 | for incomes $94,300 to $201,050 | for incomes $63,100 to $100,500 |
| 12% | for incomes $11,600 to $47,150 | for incomes $23,200 to $94,300 | for incomes $16,550 to $63,100 |
| 10% | incomes of $11,600 or less | for incomes of $23,200 or less | for incomes of $16,550 or less |
2023 tax bracket income thresholds
| Tax rate | Single filers & MFS | Married filing jointly | Head of household |
|---|---|---|---|
| 37% | for incomes over $578,125 | for incomes over $693,750 | for incomes over 578,100 |
| 35% | for incomes $231,250 to $578,125 | for incomes $462,500 to $693,750 | for incomes $231,250 to $578,100 |
| 32% | for incomes $182,100 to $231,250 | for incomes $364,200 to $462,500 | for incomes $182,100 to $231,250 |
| 24% | for incomes $95,375 to $182,100 | for incomes $190,750 to $364,200 | for incomes $95,350 to $182,100 |
| 22% | for incomes $44,725 to $95,375 | for incomes $89,450 to $190,750 | for incomes $59,850 to $95,350 |
| 12% | for incomes $11,000 to $44,725 | for incomes $22,000 to $89,450 | for incomes $15,700 to $59,850 |
| 10% | incomes of $11,000 or less | incomes of $22,000 or less | incomes of $15,700 or less |