The Internal Revenue Service (IRS) has just announced important updates about tax brackets and deductions for 2024. These changes will guide how much you owe in taxes and can also affect your paycheck. Let’s dive into what this means for you as we head into the next tax season!
What are the tax brackets for tax years 2024 and 2025?
The IRS has adjusted the tax brackets for both 2024 and 2025 to account for inflation. This means the rates you pay on your income might change. For 2024, the tax rates will range from 10% to 37%, depending on how much money you earn and how you file your taxes (as an individual or jointly with a partner).
What to know ahead of filing season
As we get ready to file taxes, it’s important to understand these changes. With standard deductions increasing, many taxpayers will find themselves paying less overall. The standard deduction for single filers will rise to $14,600, while joint filers will see their deduction increase to $29,200. This means that you can subtract this amount from your taxable income, potentially lowering your tax bill.
IRS tax rates for tax year 2024
| Income Level | Tax Rate |
|---|---|
| $0 – $11,000 | 10% |
| $11,001 – $44,725 | 12% |
| $44,726 – $95,375 | 22% |
| $95,376 – $182,100 | 24% |
| $182,101 – $231,250 | 32% |
| $231,251 – $578,125 | 35% |
| Over $578,125 | 37% |
Tax exemptions and credits
Good news for parents and caregivers! The Earned Income Tax Credit (EITC) is set to increase for 2024. If you have three or more qualifying children, you could claim a maximum credit of $7,830. This helps families get a break on their taxes and keep more money in their pocket.
What about my health savings account contributions?
If you have a Health Savings Account (HSA), you’ll be pleased to know that the contribution limit has been adjusted, too. In 2024, employees can contribute up to $3,200. This account helps you save for medical costs while getting a tax break.
Are tax brackets changing for tax year 2025?
Looking ahead, changes are also coming for 2025! The IRS plans to increase the standard deductions even further to $15,000 for single filers and $30,000 for married couples filing jointly. This means more tax relief is on the way.
As the tax season approaches, make sure to check these updates. Understanding your tax situation can help you plan better for your finances. Being aware of these changes could mean more savings for you and your family!