The Internal Revenue Service (IRS) has announced that it will adjust the tax brackets for federal income tax in 2024 by 5.4% to account for inflation. This news is significant as it may provide a tax break for some taxpayers in the next tax year. The increase in tax brackets will help prevent workers from being pushed into higher tax brackets due to cost-of-living adjustments or raises, which will be beneficial for many individuals. Additionally, the IRS is raising the standard deduction by 5.4% in 2024, which will also mean a break for many, as a higher portion of their income will fall into lower tax brackets.
The adjustment to tax brackets by the IRS for 2024 will see the new standard deduction for married couples filing jointly rise to $29,200 and an increase in the deduction for single taxpayers and married individuals filing separately to $14,600. The increase in tax brackets and standard deduction will result in more income falling into lower tax brackets next year, providing a relief to taxpayers. In addition to the changes in tax brackets, the IRS has also raised the contribution limit for various health tax-advantaged accounts such as Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) which will help individuals cover their healthcare expenses.
