An Overview of IRS’ Changes to the FY2024 Tax Brackets
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On November 9, 2023, the IRS announced its annual inflation adjustments for the upcoming FY2024 tax year. Among the changes were several adjustments to the different income tax brackets. Here is a breakdown of the latest income tax bracket inflation adjustments for individuals and married couples filing jointly.
New Income Tax Brackets for FY2024
The US federal income tax code currently has seven tax rates, which are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Each of those rates applies to a range of taxable income, also known as a tax bracket. Your taxable income is defined as your gross income minus any tax breaks you’re eligible to receive.
For tax year 2024, each of the seven rates will apply to the following new income tax brackets:
10% Tax Rate
Single
Income up to $11,600 for single filers will be taxed at the 10% tax rate.
Married Filing Jointly
Income up to $23,200 for married couples filing jointly will be taxed at the 10% tax rate.
12% Tax Rate
Single
Income above $11,600 up to $47,150 will be taxed at 12% tax rate.
Married Filing Jointly
Income above $23,200 up to $94,300 will be taxed at the 12% tax rate.
22% Tax Rate
Single
Income above $47,150 up to $100,525 will be taxed at the 22% tax rate.
Married Filing Jointly
Income over $94,300 and up to $201,050 be taxed at the 22% tax rate.
24% Tax Rate
Single
Income over $100,525 and up to $191,950 will be taxed at the 24% tax rate.
Married Filing Jointly
Income over $201,050 and up to $383,900 will be taxed at a 24% tax rate.
32% Tax Rate
Single
Income over $191,950 and up to $243,725 will be taxed at the 32% tax rate.
Married Filing Jointly
Income over $383,900 and up to $487,450 will be taxed at the 32% tax rate.
35% Tax Rate
Single
Income over $243,725 and up to $609,350 will be taxed at the 35% tax rate.
Married Filing Jointly
Income over $487,450 and up to $731,200 will be taxed at the 35% tax rate.
37% Tax Rate
Single
Income over $609,350 will be taxed at the 37% tax rate.
Married Filing Jointly
Income over $731,200 will be taxed at the 37% tax rate.
2024 Marginal Tax Brackets Explained
Each of the tax brackets above is listed with a marginal tax rate, which is also listed above. This means that each chunk of income is taxed at the corresponding rate. If you’re a single person with $100,000 of taxable income, the first $11,600 will be taxed at 10%, the next bracket up to $47,150 will be taxed at 12%, and so on.
Planning Ahead
While these changes have just recently been announced, it’s never too early to take them into account when tax planning for the upcoming year.
Have questions about how these changes could affect your unique tax plan? Contact us, our team of tax planning experts is here to help.