As January approaches and inflation continues to strain Americans’ finances, taxpayers nationwide are preparing for the upcoming filing season.
To streamline this process, the Internal Revenue Service (IRS) annually announces inflation-adjusted updates for over 60 tax provisions. Here’s a breakdown of the changes for tax years 2024 and 2025 to help you plan.
Standard Deduction Adjustments for 2024
For tax year 2024, the IRS has increased the standard deduction:
- Single filers and married individuals filing separately: $14,600, a $750 increase from 2023.
- Married couples filing jointly: $29,200, an increase of $1,500.
- Heads of households: $21,900, a rise of $1,100.
Tax Brackets for 2024
The IRS has outlined the following tax brackets for 2024:
- 37%: Income over $609,350 (single) and $731,200 (married filing jointly).
- 35%: Income over $243,725 (single) and $487,450 (married filing jointly).
- 32%: Income over $191,950 (single) and $383,900 (married filing jointly).
- 24%: Income over $100,525 (single) and $201,050 (married filing jointly).
- 22%: Income over $47,150 (single) and $94,300 (married filing jointly).
- 12%: Income over $11,600 (single) and $23,200 (married filing jointly).
- 10%: Income of $11,600 or less (single) and $23,200 or less (married filing jointly).
Key Tax Credits and Exemptions
- Alternative Minimum Tax (AMT): For 2024, the AMT exemption increases to $85,700 for single filers and $133,300 for married couples filing jointly.
- Earned Income Tax Credit (EITC): The maximum credit for taxpayers with three or more qualifying children rises to $7,830, up $400 from 2023.
Health Savings Account (HSA) Limits
For tax year 2024:
- Self-only coverage: Contribution limit rises to $3,200; out-of-pocket maximum increases to $5,550.
- Family coverage: Out-of-pocket maximum increases to $10,200.
Looking Ahead to 2025
The IRS has also released preliminary changes for 2025:
- Standard deduction: $15,000 for single filers, $30,000 for married couples filing jointly, and $22,500 for heads of households.
- Tax brackets: Adjustments include a 37% bracket starting at $626,350 (single) and $751,600 (married filing jointly).
- EITC: Maximum credit for three or more children will rise to $8,046.
As tax season nears, these updates emphasize the importance of staying informed to maximize deductions and credits.
READ ALSO:-
- Autumn Brockman’s “ARock” Empowers the Beauty Industry
- Miss Universe Guyana organization appoints new Assistant Director Ivonn Novikova
- Diana Richardson helps others create a Legacy of their own in the beauty Industry
- Live the Life of Your Dreams: The Journey of Alita Rozhanska
- Art Lewin, through Artistic Excellence in Fashion, ‘wins’ in the Clothing Niche
