IRS Publishes 2024 Income Tax Ranges and Standard Deduction
The US Internal Revenue Service (IRS) has released the adjusted income tax ranges and standard deduction amounts that will apply for the 2024 tax year. These figures will be relevant to the tax returns most Americans will file in early 2025.
The IRS makes inflation adjustments annually to tax brackets, the standard deduction, and certain other tax exemptions. The changes are designed to protect taxpayers from the effects of inflation, according to economists. However, the net effect of the changes will not significantly alter a person’s tax burden.
The new standard federal deduction for 2024 will see an increase. For individuals and married couples filing separately, the standard federal deduction will rise to $14,600, up from $13,850 this year. For married couples filing jointly, the standard deduction will increase to $29,200, up from $27,700 currently. And for those filing as head of household, the standard deduction will be $21,900, compared to the current $20,800.
Most filers claim the standard deduction, but others may choose to itemize their deductions if they exceed the standard deduction amount.
The federal income tax code currently has seven tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Each of those rates applies to a range of taxable income, also known as a tax bracket. For tax year 2024, each of the seven rates will apply to the new income tax brackets.
In addition, the IRS announced changes to Flexible Spending Accounts (FSA) and 401(k) contributions for the 2024 tax year. FSA participants will be allowed to save up to $3,200, an increase from $3,050 this year. Additionally, individuals will be allowed to save more in their 401(k) and IRA with tax advantages.
For more information about these and other tax changes for 2024, individuals are encouraged to visit the IRS website.
These changes are intended to assist taxpayers in planning their finances for the coming year, as they prepare for the 2024 tax season.