The Internal Revenue Service, or IRS, has announced the 2024 tax brackets and deductions, and there are some important changes to know before tax season kicks off in January. Understanding these updates can help you figure out how they might affect your tax returns next year.
What Are the New Tax Brackets for 2024?
Tax brackets determine how much you owe in taxes. The IRS has set up seven different tax brackets for 2024. Here’s a quick look at the rates:
| Tax Rate | Income for Single Filers | Income for Joint Filers |
|---|---|---|
| 10% | $0 to $11,000 | $0 to $22,000 |
| 12% | $11,001 to $44,725 | $22,001 to $89,450 |
| 22% | $44,726 to $95,375 | $89,451 to $190,750 |
| 24% | $95,376 to $182,100 | $190,751 to $364,200 |
| 32% | $182,101 to $231,250 | $364,201 to $462,500 |
| 35% | $231,251 to $578,125 | $462,501 to $1,000,000 |
| 37% | Over $578,125 | Over $1,000,000 |
Increased Standard Deductions
For many taxpayers, the standard deduction is a crucial part of their tax return. In 2024, the IRS has made some changes:
- The standard deduction for single filers is now $14,600.
- For married couples filing jointly, it has increased to $29,200.
This means that if you take the standard deduction, you can subtract these amounts from your income to lower the taxes you owe!
Tax Credits and Exemptions
One important benefit for taxpayers is the Earned Income Tax Credit. Starting in 2024:
- The maximum tax credit for those with three or more children will be $7,830!
This tax credit helps to reduce taxes for low- to moderate-income workers, making it a significant financial boost.
Changes to Health Savings Accounts
If you participate in a health savings account (HSA), the contribution limits are also changing:
- For 2024, individuals can contribute up to $3,200 to their HSAs.
- For family coverage, the limit will be $6,450.
These accounts help you save for medical expenses, so the higher limits give you more flexibility to save!
What’s Coming Up for 2025?
Even though we’re focusing on 2024, it’s good to know what to expect for the following year. The IRS has already released some information about tax brackets and changes for 2025:
- The standard deduction for single filers will increase to $15,000.
- Joint filers will see it rise to $30,000.
These adjustments will further help taxpayers as they prepare for the future.
Taking time to understand these updates can make a big difference when tax time arrives. Whether you’re filing on your own or getting help from a tax professional, knowing the brackets, deductions, and credits is the key to ensuring you’re making the most of your tax return!
