IRS to adjust 2024 tax brackets for inflation

The Internal Revenue Service confirmed Thursday that all seven tax brackets will receive new thresholds for the 2024 tax year to adjust for inflation. The IRS used a formula based on the consumer price index to shift the brackets by about 5.4 percent, with standard deductions rising to $14,600 for single filers and $29,200 for married couples filing jointly. The highest tax rate of 37 percent now applies to single individuals making $609,350 or more and married couples filing jointly earning more than $731,200. The lowest tax bracket is now capped at $11,600 for single filers and $23,200 for married couples filing jointly. The IRS is also raising caps on tax-advanced accounts for healthcare expenses, like HSAs and FSAs. The changes involve tax forms filed in April 2025, based on income earned in 2024.

Are adjustments necessary? The IRS adjusts limits for inflation yearly, though last year saw a rise in brackets by a historic seven percent. Adjustments help avoid “bracket creep,” in which citizens are moved to a higher tax bracket for higher wages and more expenses despite no increase in the standard of living. The change comes weeks after an IRS report in October projected a continued rise in taxes owed by citizens concurrent with a drop in taxes paid.

Dig deeper: Read Kim Henderson’s report in WORLD Magazine on Alabama lowering sales tax.