The IRS released the 2024 Tax Rate Brackets recently, along with the 2024 Standard Deduction amount and a bunch of other details that your tax man might find interesting. I couldn’t find a side-by-side comparison with 2023, so I decided to create one that I could look at, and that will hopefully help you out.
The tax rates themselves are unchanged. They remain at 10, 12, 22, 24, 32, 35, and 37 percent. The income you can earn per each bracket has been raised a fairly significant amount, on average a little more than 5.0%. This amount is about on par with inflation, which was 6.5% in 2022 and, so far in 2023, is 3.2%, according to the U.S. Inflation Calculator.
Why do tax rates matter?
If you are reading this, you probably already know why they matter, but just thought I’d make sure. These tax rates impact how much you pay Uncle Sam on the income you earn.
It’s a good idea to note now which bracket your income will likely fall into for next year. This can help with tax planning this year. For example, strategic tax moves you have to make before the end of 2023.
It can also help with paying estimated taxes throughout the year if you have your own small business.
These are Federal Tax Rates
Just to make it clear, these are Federal tax rates. State taxes will vary. I live in Texas, a state without state income taxes, so I don’t have to worry about this. The Tax Foundation is a good resource for looking up your state income tax rates. They can be found on their website here.
The Tax Rates
2024 Tax Brackets
2023 Tax Brackets
Side By Side Tax Bracket Comparison
Standard Deduction
The standard deduction amounts were also released with the tax rates. The “Tax Cuts and Jobs Act” that first went into effect for tax year 2018, and that we first felt when filing in 2019 made the standard deduction a lot more significant. It nearly doubled the amount from what it was previously.
You can learn more about the standard deduction here.
Hope this 2024 – 2023 tax rate bracket comparison helps. While you’re thinking about saving money for the next tax year, be sure to think about and calculate your net worth as well.
FIRE Away!