Managing your finances in a tax-efficient way requires planning. Thankfully, the income tax brackets for 2024 have been released by the IRS, allowing you to start strategizing ahead of time for the upcoming year — despite it still being 2023.
New IRS tax brackets for 2024
Here are the inflation-adjusted tax brackets for 2024. (Note: These brackets apply to federal income tax returns you would normally file in early 2025.) It's also essential to keep in mind that the associated tax rates remain the same (currently 10%, 12%, 22%, 24%, 32%, 35%, and 37%).
For information on the current federal tax brackets, see: 2023 Federal Tax Brackets and Income Tax Rates
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| Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
|---|---|---|
| 10% | Not over $11,600 | Not over $23,200 |
| 12% | Over $11,600 but not over $47,150 | Over $23,200 but not over $94,300 |
| 22% | Over $47,150 but not over $100,525 | Over $94,300 but not over $201,050 |
| 24% | Over $100,525 but not over $191,950 | Over $201,050 but not over $383,900 |
| 32% | Over $191,950 but not over $243,725 | Over $383,900 but not over $487,450 |
| 35% | Over $243,725 but not over $609,350 | Over $487,450 but not over $731,200 |
| 37% | Over $609,350 | Over $731,200 |
| Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household)) |
|---|---|---|
| 10% | Up to $11,600 | Not over $16,550 |
| 12% | Over $11,600 but not over $47,150 | Over $16,550 but not over $63,100 |
| 22% | Over $47,150 but not over $100,525 | Over $63,100 but not over $100,500 |
| 24% | Over $100,525 but not over $191,950 | Over $100,500 but not over $191,950 |
| 32% | Over $191,950 but not over $243,725 | Over $191,950 but not over $243,700 |
| 35% | Over $243,725 but not over $365,600 | Over $243,700 but not over $609,350 |
| 37% | Over $365,600 | Over $609,350 |
It's also important to note that these income tax rates are marginal, meaning they only apply to the income within the relevant tax bracket range for your filing status.
For example, just because a married couple files a joint return with $100,000 of taxable income in 2024 and their total taxable income falls within the 22% bracket for joint filers, it doesn't mean they will pay $22,000 in tax. The 22% rate isn’t applied as a flat rate on the entire $100,000.
Instead, the 2024 tax brackets are tied to marginal tax rates. This means that the first $22,000 of income is taxed at a rate of 10%. The next portion of income, which is the amount between $22,000 and $89,450, is taxed at a rate of 12%. Finally, only the income exceeding $89,450 is taxed at a rate of 22%.
Note: For more examples and information on how tax brackets work, see Kiplinger's guide on Federal Income Tax Brackets and Rates.
Do tax brackets go up with inflation?
One of the tax effects of high inflation is that it impacts the tax bracket ranges. This can be seen in the "width" of the 2024 brackets, which have become comparatively wider than before. (In this context, "width" refers to the difference between the lowest and highest dollar amounts in a tax bracket.)
Wider tax brackets play a role in preventing "bracket creep." Bracket expansion reduces the likelihood of you being pushed into a higher tax bracket if your income remains constant or grows at a slower rate than inflation.
Have wages and income kept up with inflation?
In recent years, on average, wages have generally increased. However, due to the pandemic, many workers' wages have only kept pace with inflation, which has, in recent years, hovered around a 40-year high.
According to the Bureau of Labor Statistics, wages and salaries increased 4.7 percent for the 12-month period ending in June 2023 and 3.2 percent a year ago. Meanwhile, the August consumer price index (CPI) — the widely used measure of inflation — rose 3.7%.
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