Inflation Adjustments
The IRS has updated more than 60 tax provisions for 2024 due to inflation. This includes tax rates and various tax-related changes.
Marginal Tax Rates for 2024
For the tax year 2024, the IRS has set distinct marginal tax rates for different income levels, which is crucial for taxpayers to understand for efficient financial planning. The thresholds for the 2024 marginal tax bracket are increasing from 2023. Changes from the previous year are noted below:
| Tax Rate (2023) | Taxable Income |
|---|---|
| 37% | over $578,125 (Individuals) $693,750 (Married Couples)* |
| 35% | over $231,250 (Individuals) $462,500 (Married Couples)* |
| 32% | over $182,100 (Individuals) $364,200 (Married Couples)* |
| 24% | over $95,375 (Individuals) $190,750 (Married Couples)* |
| 22% | over $44,725 (Individuals) $89,450 (Married Couples)* |
| 12% | over $11,000 (Individuals) $22,000 (Married Couples)* |
| *Married Couples’ amount is determined when filing jointly. |
| Tax Rate (2024) | Taxable Income |
|---|---|
| 37% | over $609,350 (Individuals) $731,200 (Married Couples)* |
| 35% | over $243,725 (Individuals) $487,450 (Married Couples)* |
| 32% | over $191,950 (Individuals) $383,900 (Married Couples)* |
| 24% | over $100,525 (Individuals) $201,050 (Married Couples)* |
| 22% | over $47,150 (Individuals) $94,300 (Married Couples)* |
| 11% | over $11,600 (Individuals) $23,200 (Married Couples)* |
| *Married Couples’ amount is determined when filing jointly. |
Standard Deduction Increases
- Married Couples Filing Jointly: Raised to $29,200 (up by $1,500).
- Single Taxpayers & Married Filing Separately: Now $14,600 (up by $750).
- Heads of Households: Increased to $21,900 (up by $1,100).
Alternative Minimum Tax (AMT)
The AMT exemption is $85,700, phasing out at higher incomes ($609,350 for singles, $1,218,700 for married couples).
Earned Income Tax Credit
The maximum credit is now $7,830 for those with three or more qualifying children.
New Tax on Crude Oil and Petroleum Products
Starting from 2023, a tax will be applied to crude oil received at U.S. refineries and petroleum products entering the U.S. This tax, effective for 2024, is set at $0.26 per barrel.
Benefits & Allowances
- Transportation Fringe Benefit: Monthly limit increases to $315.
- Health Flexible Spending Arrangements: Contribution limit rises to $3,200 with a maximum carryover of $640.
Medical Savings Account (MSA) Changes
Deductible and out-of-pocket limits for both self-only and family coverages have been increased.
Foreign Earned Income Exclusion
Now $126,500, up from $120,000.
Estate Tax Exclusion & Gift Exclusion
- Estate exclusion is $13,610,000.
- Annual gift exclusion is $18,000.
Adoption Credit
Increased to $16,810 for qualified adoption expenses.
- Unchanged Items:
- Personal exemption remains at $0.
- No limit on itemized deductions.
- Lifetime Learning Credit phase-out thresholds unchanged.
Remember, these adjustments typically apply to returns filed in 2025 for the tax year 2024.
Stay informed and plan your finances accordingly. Full Release from the IRS
The information provided herein is for general informational purposes only and is not intended to be a substitute for professional advice. While we strive to ensure accuracy and relevancy, the information may not be comprehensive or up-to-date. Individuals are strongly advised to consult the official Internal Revenue Service (IRS) resources or seek professional advice for specific guidance. The ultimate source of authoritative information is the IRS and its official publications. For the original and detailed IRS guidelines, please refer to the following document. Reliance upon any information provided in this document is at the user’s own risk.
