As the end of the year approaches, taxpayers are reminded that tax season is just around the corner. Preparations are essential to comprehend potential tax liabilities or refunds.
The Internal Revenue Service (IRS) adjusts tax brackets annually to reflect inflation, with updates typically announced over a year in advance. For the upcoming 2024 tax filing season, the IRS has raised the standard deduction to $29,200 for married couples filing jointly, which is an increase of $1,500 compared to 2023. Additionally, for single filers and married individuals filing separately, the standard deduction will be set at $14,600, up by $750. Heads of households will see their standard deduction rise to $21,900, an increase of $1,100 from the previous year.
Here are the updated IRS tax brackets for the 2024 tax year:
– 37%: Incomes above $609,350 ($731,200 for married couples filing jointly)
– 35%: Incomes exceeding $243,725 ($487,450 for married couples filing jointly)
– 32%: Incomes over $191,950 ($383,900 for married couples filing jointly)
– 24%: Incomes over $100,525 ($201,050 for married couples filing jointly)
– 22%: Incomes over $47,150 ($94,300 for married couples filing jointly)
– 12%: Incomes over $11,600 ($23,200 for married couples filing jointly)
– 10%: Incomes of $11,600 or below ($23,200 for married couples filing jointly)
While the official start date for tax season in 2025 has yet to be determined, it’s traditionally announced by the IRS in early to mid-January. For reference, tax season in 2024 will begin on January 29, following an announcement on January 8. This information should encourage taxpayers to prepare early.
Looking ahead to the 2025 tax year, the IRS has already indicated that the standard deductions will increase further, raising the threshold to $30,000 for couples filing jointly in 2025, which is an $800 jump from the previous year. This trend of increasing deductions can provide some hopeful relief to taxpayers as they navigate their financial obligations.
For the 2025 tax year, the proposed IRS tax brackets are as follows:
– 37%: Incomes above $626,350 ($751,600 for married couples filing jointly)
– 35%: Incomes exceeding $250,525 ($501,050 for married couples filing jointly)
– 32%: Incomes over $197,300 ($394,600 for married couples filing jointly)
– 24%: Incomes over $103,350 ($206,700 for married couples filing jointly)
– 22%: Incomes over $48,475 ($96,950 for married couples filing jointly)
– 12%: Incomes over $11,925 ($23,850 for married couples filing jointly)
– 10%: Incomes of $11,925 or below ($23,850 for married couples filing jointly)
As the tax season approaches, it offers an opportunity for individuals and families to reassess their finances and perhaps benefit from the increased standard deductions, which could lead to tax savings. Taxpayers are encouraged to stay informed and ready to file come January.