Inflation’s behind more increases to your income tax limits in 2024.
On Nov. 9, 2023, the IRS announced its inflation-adjusted tax brackets for 2024, raising both the thresholds for income tax brackets as well as the standard deductions for tax year 2024.
The IRS has adjusted tax brackets higher by about 5.4%. It does this using a formula that takes into account the consumer price index (CPI) to curb a phenomenon known as “bracket creep.” That is what happens when inflation, or rising prices, cause your income to notch up into a higher tax bracket without a corresponding rise in real income.
Luke Sharrett/Bloomberg via Getty Images
That’s the thing about inflation; it affects so much more than just your wallet, and that’s what makes it so harmful.
Here’s everything you need to know about the new tax brackets and how they’ll impact the amount you’ll pay in tax year 2024 — even if your income hasn’t changed.
Some tax bracket basics
Simply put, a tax bracket determines your tax rate. The IRS divides incomes into ranges, each of which are subject to a certain federal tax rate. As your income grows, your tax rate also increases. For example, someone making $500,000 per year would pay a lot more in taxes than someone making $25,000 a year.
This is a hallmark of a progressive income tax system, which is what we use in the U.S.
However, things get a little more complicated because our progressive tax system also uses marginal rates. This means that your earnings are not taxed all at one rate. Rather, you get taxed at different rates as your pay transcends brackets. In other words, in 2024, a married couple filing jointly would pay 10% on their first $23,200, then 12% on any additional income up to $94,300, 22% on any additional income up to $201,050, and so on.
Tax brackets aren’t just for income, either; they also determine how much taxes you pay on your capital gains (income from things you’ve sold for a profit like stocks or real estate) in any given year.
These are important things to keep in mind, especially if you’re doing your own taxes.
Tax brackets for the 2024 tax year by filing status
There are seven federal tax brackets for tax year 2024, and the IRS has increased its income limits by about 5.4% in 2024 for each bracket.
Here’s the breakdown:
2024 Tax Brackets for Single Filers
| Income | Tax rate |
|---|---|
$0–$11,600 |
10% of the taxable income |
$11,601–$47,150 |
$1,160 + 12% of the amount over $11,600 |
$47,151–$100,525 |
$5,426 + 22% of the amount over $47,150 |
$100,526–$191,950 |
$17,168.50 + 24% of the amount over $100,525 |
$191,951–$243,725 |
$39,110.50 plus 32% of the amount over $191,950 |
$243,726–$609,350 |
$55,678.50 + 35% of the amount over $243,725 |
$609,351 and above |
$183,647.25 + 37% of the amount over $609,350 |
2024 Tax Brackets for Married Couples Filing Jointly
| Income | Tax rate |
|---|---|
$0–$23,200 |
10% of the taxable income |
$23,201–$94,300 |
$2,320 + 12% of the amount over $23,200 |
$94,301–$201,050 |
$10,852 + 22% of the amount over $94,300 |
$201,051–$383,900 |
$34,337 + 24% of the amount over $201,050 |
$383,901–$487,450 |
$78,221 plus 32% of the amount over $383,900 |
$487,451–$731,200 |
$111,357 + 35% of the amount over $487,450 |
$731,201 and above |
$196,669.50 + 37% of the amount over $731,200 |
2024 Tax Brackets for Married Couples Filing Separately
| Income | Tax Rate |
|---|---|
$0–$11,600 |
10% of the taxable income |
$11,601–$47,150 |
$1,160 + 12% of the amount over $11,600 |
$47,151–$100,525 |
$5,426 + 22% of the amount over $47,150 |
$100,526–$191,950 |
$17,168.50 + 24% of the amount over $100,525 |
$191,951–$243,725 |
$39,110.50 plus 32% of the amount over $191,150 |
$243,726–$365,600 |
$55,678.50 + 35% of the amount over $243,725 |
$365,601 and above |
$98,334.75 + 37% of the amount over $365,600 |
2024 Tax Brackets for Heads of Households
| Income | Tax Rate |
|---|---|
$0–$16,550 |
10% of the taxable income |
$16,551–$63,100 |
$1,655 + 12% of the amount over $16,550 |
$63,101–$100,500 |
$7,241 + 22% of the amount over $63,100 |
$100,501– $191,950 |
$15,469 + 24% of the amount over $100,500 |
$191,951–$243,700 |
$37,417 plus 32% of the amount over $191,150 |
$243,701– $609,350 |
$53,977 + 35% of the amount over $243,700 |
$609,351 and above |
$181,954.50 + 37% of the amount over $609,350 |
How do 2024 tax brackets differ from 2023 tax brackets?
The 2024 tax brackets include a greater amount of income in lower tax brackets, which could spell some relief on the amount of taxes you owe.
In 2024, for example, the first $11,600 of taxable income falls into the 10% tax bracket. Compare this to 2023: The 10% bracket had a limit of $11,000 which means that $600 more of your income will be taxed at the lower 10% rate in 2024.
What are the standard deductions for tax year 2024?
A standard tax deduction is a specific amount subtracted from your total, taxable income. In 2024, the standard deduction also increases by 5.4%. Standard deductions for single filers will increase to $14,600 compared to $13,850 in 2023.
For married couples filing jointly, the standard deduction increases in 2024 to $29,200.
What are the changes to the Alternative Minimum Tax (AMT) for tax year 2024?
Uncle Sam decided certain wealthy individuals needed to pay a certain minimum in taxes, and so Congress passed the Alternative Minimum Tax (AMT) in 1969. The AMT applies to high net worth individuals, who must calculate their income tax two times (using federal tax rules and AMT rules) and pay whichever amount is higher. Some income, which would be considered “tax-free” under regular federal tax laws; for instance, the interest you earned on municipal bonds invested in private projects, like an airport, would be counted as taxable income under AMT.
There is a certain amount of income a taxpayer can exempt before paying the AMT, however. For tax year 2024, that exemption amount is $85,700 and phases out at $609,350 for single filers; this is more than 2023’s exemption amount, which was $81,300 and phased out at $578,150.
What are the changes to the Earned Income Tax Credit for tax year 2024?
In tax year 2024, the Earned Income Tax Credit (EITC), which gives lower-income workers a tax break, is also a bit higher than in 2023. For qualifying individuals with three or more children, that tax credit amount is $7,830 in 2024, up from $7,430 in 2023.
What is the tax year anyway?
Don’t let the IRS confuse you — the tax brackets for any year apply to income made in that year. In other words, you file your taxes for your 2023 income in early 2024, for your 2024 income in early 2025, and so on. The IRS released the tax brackets for 2024 in November of 2023, but 2024 taxes do not need to be filed until April of 2025.
