Taxpayers can expect to see changes in income tax rates, brackets and deductions next year due to high inflation, according to a new report from Bloomberg Tax & Accounting. Bloomberg estimates that inflation-adjusted amounts in the tax code will rise 5.4% in 2024 — less than this year’s 7.1% increase but well above the 2022 increase of 3%, Accounting Today reported.
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What it means for taxpayers is that more of their earnings will stay in lower tax brackets next year, which should reduce their income taxes. There are also decent increases in the standard deduction.
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“For the second year in a row, high U.S. inflation has contributed to a significant increase in inflation-adjusted amounts in the tax code,” Heather Rothman, vice president of analysis and content at Bloomberg Tax & Accounting, said in a statement. “Once again, our annual report provides actionable projections for tax professionals and taxpayers to begin planning for the upcoming year ahead of the official IRS announcement.”
Here’s a look at changes in tax brackets for 2024 vs. 2023:
Individual income tax rate brackets
The following tables show projected brackets for single and married taxpayers as well as surviving spouses.
Married Filing Jointly and Surviving Spouses
Married couples filing joint returns and surviving spouses will see the following changes (divide figures in half for individual married filers):
| 2023 Tax Rate Bracket Income Ranges | Projected 2024 Tax Rate Bracket Income Ranges |
| 10%: $0 to $22,000 | 10%: $0 to $23,200 |
| 12%: $22,001 to $89,450 | 12%: $23,201 to $94,300 |
| 22%: $89,451 to $190,750 | 22%: $94,301 to $201,050 |
| 24%: $190,751 to $364,200 | 24%: $201,051 to $383,900 |
| 32%: $364,201 to $462,500 | 32%: $383,901 to $487,450 |
| 35%: $462,501 to $693,750 | 35%: $487,451 to $731,200 |
| 37%: Above $693,750 | 37%: Above $731,200 |
Unmarried Individuals (Other Than Surviving Spouses and Heads of Households)
Single filers can expect the following brackets and income ranges for next year:
| 2023 Tax Rate Bracket Income Ranges | Projected 2024 Tax Rate Bracket Income Ranges |
| 10%: $0 to $11,000 | 10%: $0 to $11,600 |
| 12%: $11,001 to $44,725 | 12%: $11,601 to $47,150 |
| 22%: $44,726 to $95,375 | 22%: $47,151 to $100,525 |
| 24%: $95,376 to $182,100 | 24%: $100,526 to $191,950 |
| 32%: $182,101 to $231,250 | 32%: $191,951 to $243,725 |
| 35%: $231,251 to $578,125 | 35%: $243,726 to $609,350 |
| 37%: Above $578,125 | 37%: Above $609,350 |
Standard Deductions
Standard deductions are also expected to rise in 2024. Here’s what the Bloomberg Tax estimate looks like:
| Filing Status | 2023 Standard Deduction | Projected 2024 Standard Deduction |
| Married Filing Jointly/Surviving Spouses | $27,700 | $29,200 |
| Heads of Household | $20,800 | $21,900 |
| All Other Taxpayers | $13,850 | $14,600 |
Among the other deductions that will increase in 2024 are the the foreign earned income exclusion, which rises from $120,000 to $126,500; and the annual exclusion for gifts, which rises from $17,000 to $18,000. These higher amounts will let taxpayers increase their gifts without tax implications, Accounting Today reported.
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This article originally appeared on GOBankingRates.com: Tax Brackets Limits Are Up Thanks to Inflation — How Much More Can You Deduct?
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