IRS Updates Tax Brackets and Deductions for 2024
The Internal Revenue Service (IRS) has announced significant adjustments to the tax brackets and standard deductions for the 2024 tax year, in response to ongoing inflation.
These changes are designed to counteract “bracket creep,” a situation where taxpayers are nudged into higher tax brackets without an actual increase in purchasing power.
This annual adjustment is especially impactful during periods of high inflation, offering potential savings for American taxpayers.
Shift in Tax Brackets
For 2024, the tax brackets will see an approximate increase of 5.4%. This adjustment means that the thresholds at which different tax rates apply will be higher, potentially leading to savings for millions of Americans across various income levels.
A key element in tax calculation, the standard deduction reduces the taxable income amount. It is a crucial factor for the majority of taxpayers, determining how much of their income is subject to taxation.
This deduction plays a vital role in the overall tax liability of individuals and families.
The IRS’s adjustments for the 2024 tax year, which include changes in tax brackets and standard deductions, will be applicable to tax returns filed in 2025. These changes are part of the IRS’s ongoing efforts to adapt to economic conditions and ensure fair taxation.
With information from Fox Business.
