By: Sreeni Meka, Lakeland Wealth Management
Changes to tax ranges could save you money. Here’s what to know about filing for the 2024 tax year in 2025.
The IRS increased brackets by roughly 5.4% for tax year 2024. With inflation still elevated, the 2024 increase is higher than average—though not as high as in 2023, when double-digit inflation led to an unusually high 7% tax bracket increase. The adjustments will apply automatically when you file taxes in 2025 and could help households with stagnant income see a lower tax bill.
What are the tax brackets for 2024?
| TAX RATE | FOR INCOMES ABOVE |
| 37% | $609,350 |
| 35% | $243,725 |
| 32% | $191,950 |
| 24% | $100,525 |
| 22% | $47,150 |
| 12% | $11,600 |
| 10% | $11,600 or less |
What is the standard deduction for 2024?
The majority of tax filers claim the standard deduction to reduce their taxable income for the year. That’s because the standard deduction allows them to reduce their income more than itemizing select expenses—such as charitable contributions, major medical bills, mortgage interest and state and local taxes—would. Plus, it’s easier.
2024 Standard Deductions
| FILING STATUS | STANDARD DEDUCTION |
| Single and married filing separately | $14,600 |
| Married, filing jointly and qualified widower | $29,200 |
| Head of household | $21,900 |
What is the maximum earned-income tax credit for 2024?
How much you can claim depends on your adjusted gross income for the year and how many child dependents you claim. The IRS raised the maximum credit for 2024 to $7,830 from $7,430.
Other tax changes for 2024
- Americans will be able to electronically file 20 tax forms for the first time, including forms you may need when filing an amended tax return.
- The 401(k), 403(b), and 457 plan employee contribution limits will rise to $23,000 from $22,500.
- The IRA contribution limit increases to $7,000 from $6,500 (the catch-up contribution remains $1,000).
- The annual gift tax exclusion rises to $18,000 from $17,000.
- The estate tax exclusion climbs to $13.61 million from $12.92 million.
- The foreign-earned income exclusion increases to $126,500 from $120,000.
- The monthly limit for the qualified transportation and parking benefits increases to $315 from $300.
- The maximum you can contribute to a health savings account rises to $4,150 from $3,850.
- The maximum you can contribute to a healthcare flexible-spending account rises to $3,200 from $3,050, and the rollover maximum increases to $640 from $610.
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Via SHUTTERSTOCK
DISCLOSURE
Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalized investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.
