With January fast approaching and inflation continuing to affect Americans' finances, taxpayers across the country are getting ready for the 2025 filing season.
To help with this transition, the Internal Revenue Service (IRS) makes annual inflation adjustments, impacting over 60 tax provisions.
The IRS released the updated figures for the 2024 tax year last year, prompting taxpayers to pay attention to changes in the standard deduction for both single and married filers.
For single taxpayers and those married filing separately, the standard deduction increased to $14,600—up $750 from 2023. For married couples filing jointly, the deduction rose to $29,200, a $1,500 increase from the previous year. The IRS also noted that the standard deduction for heads of household grew by $1,100, bringing the total to $21,900.
IRS Tax Rates for the 2024 Tax Year
The IRS has announced the tax rates for its seven tax brackets for the 2024 tax year:
- 37% – Single income over $609,350; married couples filing jointly with income over $731,200
- 35% – Single income over $243,725; married couples filing jointly with income over $487,450
- 32% – Single income over $191,950; married couples filing jointly with income over $383,900
- 24% – Single income over $100,525; married couples filing jointly with income over $201,050
- 22% – Single income over $47,150; married couples filing jointly with income over $94,300
- 12% – Single income over $11,600; married couples filing jointly with income over $23,200
- 10% – Single income of $11,600 or less; married couples filing jointly with income less than $23,200
Tax Exemptions and Credits
One notable change announced by the IRS involves the Alternative Minimum Tax (AMT) exemption. The AMT is designed to ensure that high-income taxpayers pay a minimum amount of tax, even if they qualify for various tax benefits that would otherwise reduce their regular tax liability. The IRS explained that the AMT limits certain tax benefits for high earners to prevent them from avoiding taxes altogether.
The AMT exemption for the 2024 tax year has increased to $85,700, with a phase-out beginning at $609,350—up by $4,400 and $31,200, respectively, from the 2023 tax year. For married couples filing jointly, the exemption amount rises to $133,300, with phase-out starting at $1,218,700—an increase of $6,800 and $62,400 compared to 2023, according to the IRS.
Additionally, the maximum Earned Income Tax Credit (EITC) for taxpayers with three or more qualifying children is $7,830 in tax year 2024, marking a $400 increase from 2023.
According to an IRS spokesperson, based on public statistics, fewer than 180,000 taxpayers paid the Alternative Minimum Tax (AMT) out of 153.8 million tax returns filed in 2023. However, the final numbers may be higher, as the data was only compiled through November.
.jpeg)
0 Comments