The IRS recently announced new income tax brackets for 2024 that will affect millions of U.S. taxpayers. The new brackets will adjust for inflation and help ensure the U.S. tax system remains fair to all Americans.
Currently, there are seven tax brackets which range from 10% to 37%, depending on income. The new brackets will adjust for inflation and will be effective in 2024. The new bracket rates are 12%, 22%, 24%, 32%, 35%, and 37%.
Taxpayers in the highest and lowest brackets will see the biggest changes. The highest tax rate bracket of 37% will now apply to taxpayers with taxable incomes over $563,500. That’s an increase of $65,500 from the previous highest tax bracket of $498,000. For the lowest bracket, the tax rate of 12% will apply to taxable incomes between $9,950-$40,525. That’s an increase of $400 from the previous lowest tax bracket of $9,550-$40,125.
Middle-income taxpayers will also benefit from these changes. The 24% tax bracket will now apply to taxable incomes between $84,200-$160,725. That’s an increase of $15,125 compared to the current bracket of $68,075-$145,600.
The IRS is promoting the new changes by emphasizing that the tax system is fairer under these adjustments. Despite the changes, most taxpayers should not expect to see major shifts in their overall tax obligation. But some high-income taxpayers may see their effective tax rate decrease, while some lower-income taxpayers may see their effective tax rate increase.
It’s important for taxpayers to keep apprised of these changes and how they will impact their own tax situation. The new 2024 income tax brackets are an important step for keeping our U.S. tax system both fair and up-to-date for future generations.