Each fall, the Internal Revenue Service analyzes how inflation has impacted the cost of living and, in response, makes changes to how we’re taxed and how much we receive in government benefits. Earlier this month, the IRS released the latest inflation-adjusted federal income tax brackets that will go into effect for tax year 2024.
This won’t affect what tax bracket you’re in when you file your 2023 taxes in April 2024. Instead, it’ll affect any income you earn in 2024 for filing in 2025.
So what are the new tax brackets for the 2024 tax year, what other changes has the IRS announced and will any of it make a difference in your finances? Let’s break it down.
Tax Bracket Changes for 2024
For the 2024 tax year, there are seven federal tax rates:
- 10%
- 12%
- 22%
- 24%
- 32%
- 35%
- 37%
These are unchanged from the 2023 tax year. However, how the IRS sorts taxpayers into these rates has changed for the 2024 tax year, and it all comes down to your filing status and how much money you make.
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Single Filer Tax Brackets
This table shows tax brackets for single filers for the 2023 tax season compared to the new tax brackets for single filers in 2024. Note that these tax brackets also apply to married couples filing separately.
Single Filer Tax Brackets
| Tax Bracket | 2023 Taxable Income (use when you file in 2024) | 2024 Taxable Income (use when you file in 2025) |
|---|---|---|
10% | Up to $11,000 | Up to $11,600 |
12% | $11,000 to $44,725 | $11,600 to $47,500 |
22% | $44,725 to $95,375 | $47,500 to $100,525 |
24% | $95,375 to $182,100 | $100,525 to $191,950 |
32% | $182,100 to $231,250 | $191,950 to $234,725 |
35% | $231,250 to $578,125 | $243,725 to $609,350 |
37% | Over $578,125 | Over $609,350 |
Married, Filing Jointly Tax Brackets
This table shows tax brackets for married couples filing jointly for the 2023 tax season compared to the new tax brackets for joint filers in 2024.
Married, Filing Jointly Tax Brackets
| Tax Bracket | 2023 Taxable Income (use when you file in 2024) | 2024 Taxable Income (use when you file in 2025) |
|---|---|---|
10% | Up to $22,000 | Up to $23,200 |
12% | $22,000 to $89,450 | $23,200 to $94,300 |
22% | $89,450 to $190,750 | $94,300 to $201,050 |
24% | $190,750 to $364,200 | $201,050 to $383,900 |
32% | $364,200 to $462,500 | $383,900 to $487,450 |
35% | $462,500 to $693,750 | $487,450 to $731,200 |
37% | Over $693,750 | Over $731,200 |
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Head of Household Tax Brackets
This table shows tax brackets for head of household filers for the 2023 tax season compared to the new tax brackets for heads of household in 2024.
Head of Household Tax Brackets
| Tax Bracket | 2022 Taxable Income (use when you file in 2023) | 2023 Taxable Income (use when you file in 2024) |
|---|---|---|
10% | Up to $15,700 | Up to $16,550 |
12% | $15,700 to $59,850 | $16,550 to $63,100 |
22% | $59,850 to $95,350 | $63,100 to $100,500 |
24% | $95,350 to $182,100 | $100,500 to $191,950 |
32% | $182,100 to $231,250 | $191,950 to $243,700 |
35% | $231,250 to $578,100 | $243,700 to $609,350 |
37% | Over $578,100 | Over $609,350 |
Why Tax Brackets Changed
The IRS reviews tax brackets and dozens of other tax provisions each year to ensure that inflation doesn’t cause “bracket creep.”
What’s bracket creep? Because of salary increases, you might have earned more physical dollars than you did in the previous year. But due to an inflated cost of living, the increase in your income theoretically may not have made you better off. Even so, that higher income could catapult you into a more aggressive tax bracket meant for higher earners.
Thus, the IRS reviews how the cost of living shifts from year to year. With that data, pulled from the Chained Consumer Price Index (C-CPI), the IRS increases the income thresholds for each tax bracket. This keeps taxpayers from moving up into higher tax brackets without a real substantial change in income.
How Tax Brackets and Tax Rates Work
Knowing your tax rate is helpful, but how do you actually use that to estimate what you owe?
Tax rates apply only to the income within each bracket. So if you’re a single filer with taxable income of $50,000, you won’t pay a flat 22% of that $50K to Uncle Sam. Instead, according to the 2024 tax brackets, you’d pay:
- $1,160 — 10% on the first $11,600 of income
- $4,308 — 12% on the next $35,900 of income ($47,500 – $11,600 = $35,900)
- $770 — 22% on the remaining $3,500 of income ($50,000 – $47,500 = $3,500)
- $6,238 — total tax bill
So even though your marginal tax rate is 22%, you’d only pay 12.48% of your taxable income to Uncle Sam ($6,238 / $50,000 = 12.48%).
Other Tax Changes for 2024
The IRS has changed more than tax brackets for the 2024 tax year. Here are some of the other changes you’ll need to be aware when filing in 2025:
Standard Deduction in 2024
The IRS has increased the standard deduction for 2024:
- Single filers and married, filing separately: $14,600, up from $13,850 in 2023
- Married couples, filing jointly: $29,200, up from $27,700 in 2023
- Heads of household: $21,900, up from $20,800 in 2023
Since the Tax Cuts and Jobs Act of 2017, most Americans take the standard deduction. However, you can still itemize your deductions if you’d prefer.
Social Security Benefits in 2024
In October 2023, the IRS announced that Social Security benefits would increase by 3.2% starting in January 2024. While significant, it’s a much smaller bump than in 2023, when benefits went up 8.7%.
FSA, IRA and 401(k) Contributions in 2024
In addition, the IRS has announced that FSA participants can contribute $3,200 in the 2024 tax year (that’s up from $3,050 in 2023).
Employee contributions to various employer-sponsored retirement accounts, including 401(k)s, have also grown. In 2024, you can contribute up to $23,000, an increase of $500 over the 2023 limit.
Annual IRA contributions limits are also up $500 in 2024, for a max contribution of $7,000.
How Will the New Tax Brackets Affect Me?
The IRS updates tax brackets in response to inflation. If inflation outpaced your salary, you might find that you’re paying a little less to the IRS in 2024 than you did in 2023. But if your salary grew alongside inflation, what you owe to the IRS in 2024 could feel like deja vu.
And if your salary grew faster than inflation (hey, good for you!), there’s a small chance you could have graduated to a new tax bracket. You’ll wind up paying Uncle Sam a little more in taxes — unless you have enough tax credits and deductions to lower your overall tax liability.
Contributor Timothy Moore is a personal finance writer and editor in Cincinnati, Ohio. He focuses on banks, taxes, loans and insurance for The Penny Hoarder. His work has been featured on USA Today, Forbes, INSIDER, Lending Tree, LendEDU, Chime and SoFi.
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