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May 6, 2025
As tax season approaches, understanding the key changes for 2024 can help taxpayers prepare for their returns and avoid surprises. This year brings shifts in tax brackets, standard deductions, tax credits, and other provisions that could affect your refund or tax liability. Let’s dive into the differences between the 2023 and 2024 tax years and how these changes may impact your financial outcomes.
Tax brackets are adjusted annually for inflation, and 2024 is no exception. These adjustments aim to prevent “bracket creep,” where taxpayers are pushed into higher brackets due to increases in income that only keep pace with inflation.
2023 vs. 2024 Tax Bracket Comparison for Single Filers:
10%: For the 2023 tax year, any income up to $11,000. For the 2024 tax year, any income up to $11,600.
12%: For the 2023 tax year, the income range is $11,001 – $44,725. For the 2024 tax year, the income range is $11,601 – $45,375
22%: For the 2023 tax year, the income range is $44,726 – $95,375. For the 2024 tax year, the income range is $45,376 – $98,050
24%: For the 2023 tax year, the income range is $95,376 – $182,100. For the 2024 tax year, the income range is $98,051 – $189,300
32%: For the 2023 tax year, the income range is $182,101 – $231,250. For the 2024 tax year, the income range is $189,301 – $237,700
35%: For the 2023 tax year, the income range is $231,251 – $578,125. For the 2024 tax year, the income range is $237,701 – $578,850
37%: For the 2023 tax year, any income over $578,125. For the 2024 tax year, any income over $578,850.
What This Means for You:
The income thresholds for each tax rate have risen slightly, meaning some taxpayers may see a marginal reduction in taxes owed if their income stays consistent. However, those whose income increases significantly could move into a higher bracket, potentially paying more.
The standard deduction—a crucial factor in reducing taxable income—has also increased for 2024. For many taxpayers, this is welcome news as it reduces the portion of income subject to taxes.
For the 2023 tax year:
Single: $13,850; Married Filing Jointly: $27,700; Head of Household: $20,800.
For the 2023 tax year:
Single: $14,600; Married Filing Jointly: $29,200; Head of Household: $21,900.
What This Means for You:
Most taxpayers who take the standard deduction (rather than itemizing) will see a modest tax break. Married couples filing jointly benefit most, with an additional $1,500 reduction in taxable income compared to 2023.
Tax credits directly reduce your tax liability, often making them a more valuable tool than deductions. Here’s a look at key tax credit changes for 2024:
Child Tax Credit
Earned Income Tax Credit (EITC)
The EITC provides significant support for low- to moderate-income workers. In 2024, the maximum credit increases slightly:
For the 2023 tax year:
No children: $600 max.; One (1) child: $3,995 max.; Two (2) children: $6,604 max.; Three or more (3+) children: $7,430 max.
For the 2024 tax year:
No children: $610 max.; One (1) child: $4,025 max.; Two (2) children: $6,660 max.; Three or more (3+) children: $7,480 max.
What This Means for You:
Families with multiple children or low-income workers may see slightly higher refunds thanks to these adjustments. However, many of the 2021 pandemic-era enhancements to the Child Tax Credit and EITC (higher refundability and expanded income thresholds) have not been reinstated.
Tax-deferred retirement accounts, like 401(k)s and IRAs, provide significant tax advantages. For 2024, contribution limits have increased:
What This Means for You:
Higher contribution limits allow taxpayers to reduce taxable income further while preparing for retirement. Those nearing retirement can particularly benefit from the expanded catch-up options.
HSAs, a popular tool for managing healthcare costs, also see increased contribution limits for 2024:
These changes reflect adjustments for inflation, giving taxpayers with high-deductible health plans more flexibility to save for medical expenses.
While the majority of taxpayers opt for the standard deduction, those who itemize may notice changes to some deduction limits:
What This Means for You:
High-income taxpayers in states with substantial income and property taxes will continue to face limitations on SALT deductions. However, rising medical costs may make the medical expense deduction more accessible to some.
The AMT exemption amounts are adjusted for inflation in 2024:
What This Means for You:
Fewer taxpayers are subject to the AMT due to these higher exemption amounts and income phase-out thresholds.
Many taxpayers have grown accustomed to receiving substantial refunds, but several factors in 2024 could reduce the size of those refunds:
Low-Income Workers and Families
Middle-Income Taxpayers
High-Income Taxpayers
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While the 2024 tax season brings modest adjustments to tax brackets, standard deductions, and credits, most changes are incremental rather than transformative. Whether you see a larger refund or owe more depends on your specific financial situation and how well you’ve prepared throughout the year. Staying informed and proactive is the best way to make tax season as smooth as possible.
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