As the new year approaches, it’s time to start thinking about the upcoming tax season! The Internal Revenue Service (IRS) has shared important updates regarding the tax brackets and standard deductions for 2024 and 2025. Here’s everything you need to know to get ready for filing your taxes next year.
What Are the Tax Brackets for 2024?
The IRS has set up seven tax brackets for 2024, which will determine how much tax you’ll pay based on your income. These brackets range from 10% to 37%. This means that if you earn a certain amount of money, you will pay a specific percentage of that amount in taxes. Here’s a quick look at the brackets:
| Income Range | Tax Rate |
|---|---|
| $0 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 $578,125 | 37% |
Standard Deduction Increases
Another exciting change is the increase in standard deductions for 2024. This is the amount of money you can subtract from your taxable income, making it easier for many people to file their taxes. The new amounts for the standard deduction are:
- $14,600 for single filers
- $29,200 for married couples filing together
- $21,900 for heads of household
Tax Credits to Look Out For
Tax credits can help lower the amount you owe when you file. In 2024, the Earned Income Tax Credit (EITC) has increased, which helps working families and individuals with low to moderate income. The maximum amount for EITC is higher this year, providing extra help where it is needed most.
Changes to Health Savings Account Contributions
For those investing in health savings accounts (HSAs), there is good news! The contribution limits have increased as well. This means you can save more money for health-related expenses. Here’s what you need to know:
- The contribution limit for individuals is now $4,150.
- For families, the limit is $8,300.
What About Those Alternative Minimum Tax Exemptions?
The Alternative Minimum Tax (AMT) exemption is another area where changes have been made. If you earn a lot of money, you may need to pay an additional minimum amount of tax. The good news is that the AMT exemption has increased for 2024, which means that more people will be able to avoid paying this extra tax.
How Do These Changes Impact 2025?
For those looking ahead, the IRS has also made some slight adjustments for tax year 2025. The standard deductions will increase again, making it more advantageous for many taxpayers. The tax brackets will also see minor bumps, ensuring that inflation is considered as prices rise. So while it might seem like 2024 is just around the corner, it’s good to prepare for what’s coming next!
