Tax season 2024: what has changed from the previous year?
Little has changed since tax season last year, but here is what you should be aware of before you submit your return.
On Monday, 29 January, the US Internal Revenue Service (IRS) will begin processing tax returns and distributing refunds. If you want to receive your refund as quickly as possible, you can submit your return before the official start of tax season to put yourself at the head of the queue.
However, before you submit, there are a few changes you should be aware of to prevent delays if your return needs to be corrected. The most notable changes are the income tax brackets and the increases applied to the standard deduction.
Tax brackets
Each year, to adjust for inflation, the IRS alters income tax brackets. For instance, this year, compared to last, the minimum income for taxation increased by $600 to $11,600.
2023 Tax Brackets
- 10% for incomes of $11,000 or less ($22,000 for married couples filing jointly);
- 12% for incomes over $11,000 ($22,000 for married couples filing jointly);
- 22% for incomes over $44,725 ($89,450 for married couples filing jointly);
- 24% for incomes over $95,375 ($190,750 for married couples filing jointly);
- 32% for incomes over $182,100 ($364,200 for married couples filing jointly);
- 35% for incomes over $231,250 ($462,500 for married couples filing jointly).
2024 Tax Brackets
- 10% for incomes of $11,600 or less ($23,200 for married couples filing jointly)
- 12% for incomes over $11,600 ($23,200 for married couples filing jointly)
- 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
- 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
- 32% for incomes over $191,950 ($383,900 for married couples filing jointly)
- 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
The standard deduction
The standard deduction represents the amount that can be subtracted from one’s income before tax is levied against it.
Like the tax brackets, the standard deduction increases, allowing workers to hold on to a slightly higher percentage of their salary or the same amount if no raises are awarded. Below, you can compare the standard deduction offered last year and how it has risen this year.
2023 Standard Deduction
- Married couples (filing jointly): $27,700
- Single taxpayers and married individuals filing separately: $13,850
- Heads of households: $20,800
2024 Standard Deduction
- Married couples (filing jointly): $29,200
- Single taxpayers and married individuals filing separately: $14,600 for 2024
- Heads of households: $21,900
Alternative Minimum Tax
The Tax Foundation defines the Alternative Minimum Tax (AMT) as “a separate tax system that requires some taxpayers to calculate their tax liability twice—first, under ordinary income tax rules, then under the AMT—and pay whichever amount is highest.”
This year, the AMT exemption increased to $85,700 ($81,300 in 2023) and affects incomes up to $609,350 ($578,150 in 2023). For married couples these thresholds increase to $133,300 to $1,218,700 ($126,500 to $1,156,300 in 2023).
Earned Income Tax Credit
Similarly, the Earned Income Tax Credit (EITC) is worth $7,830 this year, $400 more than in 2023. This credit is offered to low- and middle-income workers, which helps them reduce their tax burden.
Who can claim the Earned Income Tax Credit
- Have worked and earned income under $63,398
- Have investment income below $11,000 in the tax year 2023
- Have a valid Social Security number by the due date of your 2023 return (including extensions)
- Be a U.S. citizen or a resident alien all year
- Not file Form 2555, Foreign Earned Income
- Meet certain rules if you are separated from your spouse and not filing a joint tax return
Some states, like California, offer their own EITC, and taxpayers should make sure that if they qualify, they claim this credit on their return.