New IRS tax brackets take effect in 2024, meaning your paycheck could be bigger next year

[mystery-ak]

New IRS tax brackets take effect in 2024, meaning your paycheck could be bigger next year

 December 26, 2023 9:00am EST
New IRS tax brackets take effect in 2024, meaning your paycheck could be bigger next year
Tax brackets to shift higher by 5.4% in 2024

By Megan Henney FOXBusiness

Higher federal income tax brackets and standard deductions will take effect at the beginning of January, potentially giving Americans a chance to increase their take-home pay in 2024 and shield more of their income from the IRS.

The IRS announced the higher limits for the federal income tax bracket and standard deductions in November. The increase is intended to avoid a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.

The IRS makes such adjustments annually, but in times of high inflation, the increases are more significant and impactful for taxpayers. Although inflation has fallen considerably over the past year, it remains higher than both the pre-pandemic average and the Federal Reserve's 2% target.

This year, the tax brackets are shifting higher by about 5.4%.

The higher thresholds where tax rates take effect could mean savings for millions of Americans across all income brackets.

Here are the changes unveiled by the IRS. The inflation-adjusted elements will apply to the 2024 tax year, meaning returns filed in 2025.

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https://www.foxbusiness.com/money/new-irs-tax-brackets-take-effect-2024-meaning-your-paycheck-could-be-bigger-next-year

[Hoodat]

The IRS announced the higher limits for the federal income tax bracket and standard deductions in November. The increase is intended to avoid a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.

They don't do this because they are nice.  They do this because it is required by law, thanks to President Reagan.

This year, the tax brackets are shifting higher by about 5.4%.

Inflation rose substantially more than 5.4%.  So in essence, the IRS is cheating the law by falsifying the true inflation rate.

And contrary to what the title tries to portray, it is only your last portion of income that is affected, and only if it puts you back into a lower bracket.  And this only if you haven't gotten a raise over the last year, in which you purchasing power would have already fallen by over 10%.

[Wingnut]

When pigs fly the average taxpayer will not become the main course  at the tax table. 

[DB]

It's like when our wonderful city council members declare that the tax RATE has gone down, but they fail to mention that property VALUES have gone up, so I'll still pay more in taxes EVERY year.  It's just a game to them...  2 more years till my taxes are locked in, THEN I'm voting for EVERY friggen bond issue that is proposed.   

How does that work?

[Hoodat]

Here's how it works at the federal level.  The 2023 brackets for a single person include 22% for income between $45K and $95K and then 24% for income above that (up to $182K).  So a person making $100K will have to pay an extra 2% on that last $5K of income (i.e. $50).

Moving on to 2024, the brackets are adjusted.  The $45K-to-$95K bracket now becomes the $47K-$100K bracket.  So that person doesn't have to pay the extra 2% on the last $5K of income.  Also, that person gets a break at the bottom end of each bracket, realizing maybe another $250 in savings.  But that same person has lost $5K in purchasing power due to inflation.  Yet the Biden Administration is trying to present this as a win.