As the year’s end approaches, taxpayers should gear up for the upcoming tax season, which is expected to start in about a month. With essential tax updates from the Internal Revenue Service (IRS), it’s crucial to understand your potential tax obligations or refunds.
In anticipation of tax filing for 2024, the IRS has revised the standard deduction amounts. For married couples filing jointly, the standard deduction increases to $29,200, a rise of $1,500 from the previous tax year. For single filers or married individuals filing separately, the deduction is set at $14,600, increasing by $750. Moreover, heads of households will see their deduction grow to $21,900, which is an increase of $1,100 from 2023.
Tax brackets for 2024 reflect these adjustments as follows:
– 37% for incomes over $609,350 ($731,200 for married couples filing jointly)
– 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
– 32% for incomes over $191,950 ($383,900 for married couples filing jointly)
– 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
– 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
– 12% for incomes over $11,600 ($23,200 for married couples filing jointly)
– 10% for incomes of $11,600 or less ($23,200 for married couples filing jointly)
While Tax Day remains set for April 15, the start date for tax season has yet to be confirmed. Historically, the IRS announces when it will begin accepting tax returns in early to mid-January. For context, in 2024, tax season commenced on January 29, while it started on January 23 in 2023. Keeping an eye on these announcements will benefit those looking to file early.
Looking ahead to 2025, taxpayers can anticipate even higher standard deductions. Couples filing jointly will have a deduction of $30,000, while heads of households will receive $22,500, and individuals filing separately will benefit from a $15,000 standard deduction. The tax brackets for 2025 are also set to reflect higher income thresholds, providing some relief to taxpayers.
As we transition into another tax season, it’s essential to remain informed and prepare adequately. These changes can lead to potential savings for many, making it a promising time for taxpayers to reassess their financial situations. Planning ahead may help ensure that individuals and households are well-positioned when it comes time to file.