For the 2024 tax year, there are several important adjustments that taxpayers should be aware of when filing in 2025. These adjustments aim to alleviate the impact of inflation on personal finances, particularly through changes in tax brackets and the standard deduction.
The IRS has increased the income thresholds for each tax bracket, allowing individuals to earn more before moving into a higher tax rate. Here are the updated ranges for the most common filing statuses:
| Tax rate | Single | Married filing jointly | Married filing separately | Head of household |
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $11,600 | $0 to $16,550 |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 | $11,601 to $47,150 | $16,551 to $63,100 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 | $47,151 to $100,525 | $63,101 to $100,500 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 | $100,526 to $191,950 | $100,501 to $191,950 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 | $191,951 to $243,725 | $191,951 to $243,700 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 | $243,726 to $365,600 | $243,701 to $609,350 |
| 37% | $609,351 or more | $731,201 or more | $365,601 or more | $609,351 or more |
These changes are designed to reduce the tax burden for middle-income earners by shifting more income into lower tax rates.
The standard deduction has also been adjusted, which directly reduces the
income on which you pay taxes. The new amounts are:
This increase in the standard deduction means that many taxpayers will have a higher portion of their income excluded from taxation, leading to potential tax savings.
Example Calculation:
If you’re a married couple with an income of $95,000 in 2024, you can apply the standard deduction of $29,200, reducing your taxable income to $65,800. The tax would be calculated as follows:
If you’re an employee, update your W-4 form to reflect these changes, so your paycheck better reflects the new tax brackets.
Consider maximizing contributions to retirement plans like 401(k)s and IRAs to reduce your taxable income. For 2024, the contribution limit for 401(k)s is $23,000 (up from $22,500), and for IRAs, it’s $7,000 (up from $6,500)
Credits like the Child Tax Credit or the Earned Income Tax Credit (EITC) can also reduce your tax liability. For 2024, the EITC could provide up to $7,830 for taxpayers with three or more children
Credits like the Child Tax Credit or the Earned Income Tax Credit (EITC) can also reduce your tax liability. For 2024, the EITC could provide up to $7,830 for taxpayers with three or more children
These adjustments provide significant opportunities for tax savings. If you’re unsure how these changes apply to your situation, it’s advisable to consult a tax professional to ensure you’re maximizing your benefits.
Every taxpayer’s situation is unique, and while the recent changes are advantageous, understanding how to apply them correctly to your specific case can be complex. A tax advisor or accountant can be essential in helping you to:
Avoid surprises when filing your return: An expert can assist in calculating the exact amount you owe to avoid penalties for underpayment of
taxes.
Strategically plan: Take advantage of new limits and tax adjustments to maximize your benefits throughout the year.
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