Each year, the IRS adjusts the standard deduction, tax brackets, and other tax breaks to compensate for inflation. Last week, they released their numbers for tax year 2024, which means these changes will impact income tax returns filed in 2025.
2024 Standard Deduction
When the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction in 2018, many taxpayers stopped itemizing on their returns. Today, nearly 90% of all filers use the standard deduction.
For the 2024 tax year, the amounts are as follows:
|Filing Status||2024 Standard Deduction||2023 Standard Deduction|
|Married Filing Separately||$14,600||$13,850|
|Head of Household||$21,900||$20,800|
|Married Filing Jointly||$29,200||$27,700|
The 2024 standard deduction will be 5.4% higher than it is for 2023. Of course, taxpayers should still compare their overall tax advantages before deciding whether to use the standard deduction or itemize their taxes when filing.
New 2024 Income Tax Brackets
In addition to the increased standard deduction, the IRS has also altered the 2024 tax brackets. Although there are still just seven (7) marginal rates, the taxable income ranges differ slightly from those in 2023.
|Marginal Rate||2024 Income Tax Bracket|
|10%||Up to $11,600 ($23,200 Married Filing Jointly)|
|12%||Income over $11,600 ($23,200 Married Filing Jointly)|
|22%||Income over $47,150 ($94,300 Married Filing jointly)|
|24%||Income over $100,525 ($201,050 Married Filing Jointly)|
|32%||Income over $191,950 ($383,900 Married Filing Jointly)|
|335%||Income over $243,725 ($487,450 Married Filing Jointly)|
|37%||Income over $609,350 ($731,200 Married Filing Jointly)|
For example, a single filer with taxable income of $45,000 will have a marginal rate of 12% when filing in 2025. For this coming tax season, however, the same filer will be assessed at a 22% marginal tax rate.
It’s also important to note that you will not be assessed the same rate on all your taxable income unless you earn $11,600 or less. A single taxpayer with taxable income of $125,000 in 2024 will be taxed as follows:
- 10% on the first $11,600
- 12% on income between $11,600 and $47,150
- 22% on income between $47,150 and $100,525
- 24% on income over $100,525
Other Annual Tax Adjustments for Taxes Filed in 2025
The IRS also makes annual inflation adjustments to several other tax provisions. Some of the most notable include:
- Earned Income Tax Credit will increase to $7,830 (taxpayers with 3+ qualifying children).
- The Alternative Minimum Tax exemption for 2024 is $85,700 compared to $81,300 for 2023.
- The annual gift exclusion increases by $1,000 to $18,000 for 2024.
- Adoption Tax Credit will increase to $16,810, up from $15,950 in 2023.
- For tax year 2024, the foreign earned income exclusion is $126,500, which is up $6,500 from 2023.
For a full list of all the inflation adjustments for taxes filed in 2025, head over to IRS.gov.