The Internal Revenue Service (IRS) recently announced the income tax brackets for 2024, and taxpayers will need to familiarize themselves with the changes. In a press release, the IRS said that the new set of brackets would adjust for inflation and account for any jump in incomes. This newly released tax schedule is designed to provide increased fairness and equity in the tax system as it relates to inflation and rising wages.
The most notable change for 2024 is the increase of income taxes so that it more accurately reflects the growth of incomes. This means that those earning above certain thresholds will pay a higher tax rate than those earning below those thresholds. Specifically, the new brackets, found in the IRS release, range from 10% to 37%, with higher incomes being taxed at the higher rate. Additionally, the standard deduction is increasing for filers of varying categories, including individuals, married couples, and heads of households. This will further reduce the burden of income taxes for 2024 taxpayers.
In addition to the new income tax brackets, the IRS has also made a few other changes for 2024. The Earned Income Tax Credit (EITC) has been adjusted to match the new income thresholds. This means that individuals who qualify for the credit may receive larger returns than before. Furthermore, the Alternative Minimum Tax (AMT) is now a fixed amount of $31,300 for individual filers, rather than a percentage of income. The AMT protects individuals from an unfair tax burden based on their income bracket.
Given the new information about the 2024 income tax brackets, it is important for taxpayers to be aware of the changes and understand how they might affect their taxes. For example, those that are expected to enter higher income brackets should make sure to budget accordingly. Additionally, those who expect to qualify for the Earned Income Tax Credit should familiarize themselves with the new thresholds when filing.
Overall, the IRS is taking steps to make income taxes more equitable and to adjust for inflation. With the knowledge of these changes, individuals can better plan for their taxes in 2024 and remain informed about their taxes.