TaxWatch

IRS announces 2024 income-tax brackets: Here’s what they mean for your tax bill

The IRS increased the ranges on income-tax brackets by approximately 5.4% for 2024 returns

The IRS has announced the 2024 tax brackets. The yearly adjustments have special significance as inflation continues to weigh on U.S. taxpayers.

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After scorching-hot inflation pushed income-tax brackets and a widely used tax deduction to their largest single-year increase in decades for the 2023 tax year, another round of sizable adjustments is coming next year.

The 2024 increases, however, won’t be as large as last year’s for tax brackets and the standard deduction.

The ranges on income-tax brackets increased by approximately 5.4% for 2024 returns, according to numbers from the the Internal Revenue Service. The brackets will apply to taxes filed in 2025 on income earned in 2024.

For 2023 returns, the ranges increased by approximately 7%. That was the largest increase in decades, according to Robert McClelland, a senior fellow at the Tax Policy Center. The 5.4% increase is the second-largest yearly increase to the brackets, while a 5.3% increase in 1992 was the third-largest increase, McClelland noted.

For both 2023 and 2024, the tax code’s sizeable inflation adjustments reflect “a bad thing: that your paycheck buys less than it used to,” McClelland said.

Each year, the IRS adjusts tax brackets, the standard deduction and approximately 60 other tax provisions that are designed to adjust higher for inflation.

See also: Heads up, investors: Capital-gains tax rules for 2024 are here

The larger 2024 standard deduction is $14,600 for individuals, up $750 from the 2023 amount. The standard deduction is $29,200 for married couples filing jointly, up $1,500.

In a time of rising costs, the size of those increases matter as people eye the size of their potential tax bill or refund. The upward adjustments are meant to address “bracket creep,” a term that refers to households moving into higher tax brackets that haven’t changed, even as inflation pushes up their income but not their spending power.

The effects of bracket adjustments can vary from household to household. Bracket management should be a particular focus for people planning their retirement, for business owners and for donors considering charitable contributions, experts say.

Generally, if a person’s income stays the same from one year to the next, they’ll be taxed slightly less as brackets increase.

A smaller tax bill may sound appealing, but it also means a person’s wages were stagnant year over year. If a person’s income rises by around the same rate as the inflation adjustments and they have no major tax events — like the birth of a child or a home sale — their tax situation should stay about the same.

U.S. workers’ hourly wages grew by a median 5.8% in October from a year earlier, according to the Federal Reserve Bank of Atlanta’s wage tracker. The wages are nominal and not adjusted for inflation.   

Americans will be filing their returns for tax year 2023 during the upcoming tax season. In early 2025, they’ll be filing their 2024 returns using the brackets that the IRS just announced.

Read also: You can save up to $23,000 in your 401(k) next year, IRS says

In 2025, Americans will also be facing the end of many tax rules that went into effect under the Trump administration’s 2017 Tax Cuts and Jobs Act. The sweeping law reduced marginal tax rates on five of the seven tax brackets and nearly doubled the standard deduction.

Those amounts are slated to expire at the end of 2025, and it’s difficult to say what the tax landscape will look like. But taxpayers can plan for their 2024 returns.

Keep in mind that most people do not fall into just one tax bracket, but have a portion of their income taxed at a certain rate, with the money above that level taxed at a higher rate.

Also remember that tax brackets do not reflect a person’s final tax bill. The process still includes applying tax credits — like the child tax credit for families or the premium tax credit linked to healthcare or electric-vehicle credits — to get to that point.

2024 income-tax brackets

Single Taxable income The tax is:
10% $0 to $11,600 10% of the taxable income
12% Over $11,600 to $47,150 $1,160 plus 12% above $11,600
22% Over $47,150 to $100,525 $5,426 plus 22% above $47,150
24% Over $100,525 to $191,950 $17,168.50 plus 24% above $100,525
32% Over $191,950 to $243,725 $39,110.50 plus 32% above $191,150
35% Over $243,725 to $609,350 $55,678.50 plus 35% above $243,725
37% Over $609,350 $183,647.25 plus 37% above $609,350

Married filing jointly Taxable income The tax is:
10% $0 to $23,200 10% of the taxable income
12% Over $23,200 to $94,300 $2,320 plus 12% above $23,200
22% Over $94,300 to $201,050 $10,852 plus 22% above $94,300
24% Over $201,050 to $383,900 $34,337 plus 24% above $201,050
32% Over $383,900 to $487,450 $78,221 plus 32% above $383,900
35% Over $487,450 to $731,200 $111,357 plus 35% above $487,450
37% Over $731,200 $196,669.50 plus 37% above $731,200

Head of household Taxable income The tax is:
10% $0 to $16,550 10% of the taxable income
12% Over $16,550 to $63,100 $1,655 plus 12% above $16,550
22% Over $63,100 to $100,500 $7,241 plus 22% above $63,100
24% Over $100,500 to $191,950 $15,469 plus 24% above $100,500
32% Over $191,950 to $243,700 $37,417 plus 32% above $191,150
35% Over $243,700 to $609,350 $53,977 plus 35% above $243,700
37% Over $609,350 $181,954.50 plus 37% above $609,350