Inflation has increased the cost of everything from eggs to airfare in the past couple of years, and the Internal Revenue Service (IRS) is looking to lessen the burden on taxpayers. The agency announced Thursday that it will adjust the income thresholds for tax brackets for the 2024 tax season.
As part of a widespread modification that will change more than 60 tax provisions, the IRS will increase the threshold for each federal income band, boosting the threshold at which taxpayers are required to pay a higher percentage of their taxable income.
Here is the main breakdown:
- 10% for incomes of single individuals with 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)
- 37% for incomes over $609,350 ($731,200 for married couples filing jointly)
These income thresholds are roughly 5.5% to 6% higher than those announced for the 2023 tax season, where the lowest rate was for single filers making $11,000 or less.
The change will raise the top tax rate of 37% to $609,350 for individuals and $731,200 for married couples filing jointly—up from the current tax season’s threshold of $578,126 and $693,751, respectively. Each band will receive an incremental increase that will allow taxpayers to pay a lower marginal rate on a greater percentage of their income.
Additionally, the IRS will increase the standard deduction by 5.4%. That will bring the total deduction for individual taxpayers to $14,600, which is $750 more than the current deduction of $13,850. Married couples filing jointly will receive a deduction of $29,200, $1,500 more than the 2023 rates.
Taxpayers with flexible spending accounts (FSA) and health savings accounts (HSA) will be able to put away a higher percentage of their pre-tax income under the new rules, meaning they will not have to pay taxes on the portion of their income they stash away. The new limits allow contributions of up to $3,200 for FSAs and $4,150 for HSAs starting in 2024.
These updates to the tax code will go into effect for 2024 tax returns, meaning they will apply to taxes filed based on 2024 income. Those tax returns will be filed in 2025.
You can check out the full announcement here.