2024 Federal Income Tax Brackets

As we near the end of 2023, the Internal Revenue Service (IRS) announced the 2024 tax brackets for federal income tax purposes. A tax bracket is a range of income taxed at a specified rate. U.S. income tax rates are graduated, so you pay different rates on different amounts of taxable income.

Why is this important? If you know the 2024 tax brackets, you can make plans to reduce your tax bill by implementing smart tax strategies, such as adjusting your income tax withholding.

There are currently seven federal income tax rates, ranging from 10 percent up to 37 percent, with the higher rates applying to higher earners. Your highest tax bracket does not reflect how much you pay on all of your income. For example, if you are a single filer in 2024 in the 22% tax bracket, you won’t pay 22% of all your taxable income. You will pay 10% of taxable income up to $11,600, 12% on the amount over $11,600 to $47,150, and 22% above that (up to $100,525).

Each year the IRS adjusts the tax brackets for inflation. Because inflation has been higher than average this year, you might fall into a lower tax bracket for your 2024 earned income than in 2023. Below are the tax brackets for income earned in tax year 2024:

*Note: Married filing separately pays at the same rate as singles. Source: Internal Revenue Service

Standard vs. Itemized Deductions

The standard deduction will also be higher in 2024. The standard deduction is the fixed amount the IRS allows you to deduct from your annual income - even if you don’t itemize your tax return. The lower your taxable income, the lower your tax bill. In 2024, the standard deduction rises to $14,600 for single filers, up from $13,850 for 2023. For couples filing jointly, the standard deduction rises to $29,200 from $27,700 in the 2023 tax year. And each joint filer age 65 and over can increase the standard deduction by $1,550 (a total of $3,100 if both joint filers are 65-plus).

Each year you should figure out the best option for your tax deductions, standard vs. itemized, as your circumstances may change year to year. If you itemize individual tax deductions (e.g., for charitable donations or medical expenses within IRS guidelines) the total must add up to more than the standard deduction to make itemizing worthwhile.

Reminder: 2023 Taxes are Due by 4/15/2024

Your 2023 taxes are due April 15, 2024; your 2024 taxes are due April 15, 2025. If you were hit with a big tax bill in the past, talk with a tax adviser about how to reduce your next tax bill. A good first step is to look at how much tax is being withheld from your paycheck. The IRS provides a free withholding estimator that can tell you how much you should have taken out. See https://apps.irs.gov/app/tax-withholding-estimator

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Best regards,

Janet Rhodes Friedman, CFP®, CDFA®, MBA Janet@PlanWithFPS.com

617-630-4978

Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.