As the year comes to an end, many people start thinking about their taxes. The Internal Revenue Service (IRS) has made some big changes for the 2024 tax season, and it’s essential to know how these changes could affect you. With new tax brackets, increased deductions, and more, understanding the updates is key to making filing your taxes easier next year.
What are the tax brackets for tax years 2024 and 2025?
The IRS has released the tax brackets for 2024, which will guide how much tax you pay based on your income. There are seven tax brackets in total. Here’s a quick look:
| Income Range | Tax Rate |
|---|---|
| Up to $11,000 | 10% |
| $11,001 to $44,725 | 12% |
| $44,726 to $95,375 | 22% |
| $95,376 to $182,100 | 24% |
| $182,101 to $231,250 | 32% |
| $231,251 to $578,125 | 35% |
| Over $578,126 | 37% |
What to know ahead of filing season
The 2024 tax season kicks off in January, giving you some time to gather your documents. It’s important to keep an eye on any changes that might affect how much tax you owe or the refund you might get. The IRS has updated several aspects related to deductions and credits, making this year different from the last.
IRS tax rates for tax year 2024
As mentioned, the tax rates have a starting point of 10% and can go up to 37% based on your income level. If your income moves into a higher bracket, don’t worry! You only pay the higher rate on the income that falls into that bracket. This means you can still earn more without losing all your hard-earned money to taxes.
Tax exemptions and credits
In 2024, the standard deduction has increased significantly. Here’s what you need to know:
- Single filers will enjoy a standard deduction of $14,600.
- Married couples filing jointly will see their deduction rise to $29,200.
- Heads of households have an even bigger deduction of $21,900.
These deductions can help lower your taxable income, which is great news when it comes time to file!
What about my health savings account contributions?
If you have a health savings account, you’re in luck! In 2024, you can contribute up to $3,200 if you’re on your own. The maximum out-of-pocket costs for individuals will be $5,550, too. This means you can save more for those unexpected medical expenses, which is always a relief.
Are tax brackets changing for tax year 2025?
Even though we’re focusing on 2024, it’s wise to keep an eye on the future. The IRS has already hinted at changes coming in 2025. For instance, the standard deduction is expected to rise to $15,000 for single filers and to $30,000 for married couples filing jointly. So, planning ahead can really pay off!
This year’s changes and the exciting updates coming in 2025 offer a great opportunity to get ahead on your taxes. By staying informed, you can be better prepared when it’s time to file.
