The Internal Revenue Service on Thursday announced the inflation adjustments for the standard deduction, federal income tax brackets, and a host of other provisions for tax year 2024.
The standard deduction for married couples filing jointly for tax year 2024 will rise to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction will rise to $14,600 for 2024, up $750 from this year; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100.
The IRS also announced the new dollar amounts that will apply to the federal income tax brackets. For tax year 2024, the top marginal tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly). The other rates and corresponding dollar amounts are as follows:
- 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)
- The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly)
The Alternative Minimum Tax exemption amount for tax year 2024 is $85,700, with a phaseout beginning at $609,350. For married couples filing jointly, the exemption is $133,300 and begins to phase out at $1,218,700. The AMT is a complicated formula whereby some taxpayers must calculate their liability twice—under the ordinary income tax rules and also under AMT rules—and pay whichever amount is higher. The Tax Cuts and Jobs Act of 2017 increased the AMT’s exemption and exemption phaseout through 2025, greatly reducing the number of affected taxpayers to an estimated 200,000, down from approximately 5 million, according to the Tax Foundation.
For 2024, the maximum amount that employees can contribute to their pretax health flexible-spending accounts is $3,200, up from $3,050 from this year.
Estates of people who die in 2024 have a basic exclusion amount of $13,610,000, increased from $12,920,000 for estates of those who die in 2023. The annual exclusion for gifts increases to $18,000 for calendar year 2024, up from $17,000 this year.
For a full list of all the provisions, see here.
Write to Elizabeth O’Brien at [email protected]
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