IRS Announces 2024 Tax Adjustments: Key Highlights

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New Tax Brackets for 2024

Once again, the IRS has released new tax brackets and tax limits for the 2024 tax year. More than 60 tax provisions have been adjusted for inflation, including standard deductions, 401(k) and IRA contribution limits, estate tax exclusions, and more. These changes apply to the taxes you’ll file in 2025, but could affect your withholding and estimated taxes, retirement contributions, and overall tax planning throughout 2024.

2024 Federal Tax Brackets

Although marginal tax rates are staying the same in 2024, the income thresholds for each tax bracket have been adjusted for inflation. As a result, taxpayers will see more of their income shift to lower tax brackets. For example, in 2024 the first $11,600 of income is taxed at 10% for single taxpayers, versus the first $11,000 in 2023.

2024 Federal Tax Brackets by Filing Status

• Unmarried: 10% (Not over $11,600), 12% ($11,601 to $47,150), 22% ($47,151 to $100,525), 24% ($100,526 to $191,950), 32% ($191,951 to $243,725), 35% ($243,726 to $609,350), 37% (Over $609,350)
• Head of Household: 10% (Not over $16,550), 12% ($16,551 to $63,100), 22% ($63,101 to $100,500), 24% ($100,501 to $191,950), 32% ($191,951 to $243,700), 35% ($243,701 to $609,350), 37% (Over $609,350)
• Married Filing Jointly: 10% (Not over $23,200), 12% ($23,201 to $94,300), 22% ($94,301 to $201,050), 24% ($201,051 to $383,900), 32% ($383,901 to $487,450), 35% ($487,451 to $731,200), 37% (Over $731,200)
• Married Filing Separately: 10% (Not over $11,600), 12% ($11,601 to $47,150), 22% ($47,151 to $100,525), 24% ($100,526 to $191,950), 32% ($191,951 to $243,725), 35% ($243,726 to $365,600), 37% (Over $365,600)

11 New Tax Limits and Deductions

In addition to announcing new tax brackets, the IRS has made inflation-related adjustments to many common tax limits, deductions, contributions, and credits. Here are 11 commonly referenced tax limits for 2024:

Standard Deductions

Standard deductions for people who don’t itemize deductions on their tax returns are going up in 2024. Here’s a side-by-side comparison of standard deductions for 2023 and 2024:

• Single and married filing separately: $13,850 (2023) vs. $14,600 (2024)
• Head of household: $20,800 (2023) vs. $21,900 (2024)
• Married filing jointly: $27,700 (2023) vs. $29,200 (2024)

401(k) Contribution Limits

If you contribute to a retirement plan at work, you may be able to increase your contribution for 2024. Employees who contribute to 401(k), 403(b), most 457 plans, or the federal government’s Thrift Savings Plan may contribute up to $23,000 in 2024. Employees ages 50 and older can contribute an additional $7,500 for a total contribution of up to $30,500.

IRA Contribution Limits

Contribution limits are up for individual retirement accounts (IRAs) as well. The 2024 contribution limit for traditional and Roth IRAs is $7,000, up from $6,500 in 2023. The catch-up contribution for people 50 and older remains at $1,000.

IRA Deduction Phase-Out

If you contribute to a 401(k) or other retirement plan at work, you may be able to deduct your contribution to a traditional IRA if you meet IRS requirements. For taxpayers who are covered by a retirement plan at work—or are married to someone who is—the IRS reduces the amount you can deduct on your tax return when you reach certain income levels, and phases out the deduction gradually until your income reaches an inflation-adjusted cap.

For 2024, these are the changes made to IRA phase-out ranges:

• Single taxpayers covered by a workplace retirement plan: The deduction for a traditional IRA contribution begins phasing out at $77,000 and is phased out entirely at $87,000.
• Married couples filing jointly with the contributing spouse covered by a workplace plan: Deductions begin phasing out at $123,000 and drop to zero at $143,000.
• Taxpayers without a workplace retirement plan who are married to someone who is: Contributions are deductible for incomes up to $230,000 and are phased out entirely at $240,000.
• Married individuals filing separately who are covered by a workplace plan: Deductions are reduced for any income (including $0) up to $10,000 and zero out at $10,000.

Roth IRA Income Limits

Roth IRAs offer unique tax benefits, but you must meet IRS income requirements to contribute. Depending on your 2024 income, you may be able to contribute the maximum of $7,000 ($8,000 if you’re 50 or over), a reduced amount, or nothing. Here are the income ranges that determine your Roth eligibility:

• Single, head of household or married filing separately (and you didn’t live with your spouse at any point during the year): Less than $146,000 (Up to the maximum), $146,000 to $161,000 (A reduced amount), $161,000 or more (Zero)
• Married filing jointly or qualified widow(er): Less than $230,000 (Up to the maximum), $230,000 to $240,000 (A reduced amount), $240,000 or more (Zero)
• Married filing separately: Less than $10,000 (A reduced amount), $10,000 or more (Zero)

SIMPLE IRA Contributions

Some small businesses use SIMPLE IRA plans to help employees save toward retirement. In 2024, individuals can contribute up to $16,000 to a SIMPLE account with an additional $3,500 catch-up contribution for people 50 and older.

FSA Contribution Limits

In 2024, employees can contribute up to $3,200 to flexible spending accounts (FSAs) through salary reductions at work. For plans that allow funds to be carried over from one year to the next, the maximum carryover in 2024 is $640.

Adoption Tax Credits

Adoptive parents may claim a credit for qualified adoption expenses up to $16,810 in 2024. Qualified expenses include adoption fees, court costs, attorney fees, traveling expenses, and other direct costs of legally adopting a child.

Estate Tax Exclusions

When a person passes away, their estate may owe taxes on assets that are passed along to heirs. The estate of anyone who passes away in 2024 can pass along up to $13.61 million without being subject to federal estate taxes, up from $12.92 million in 2023.

Gift Exclusion

Gifts that exceed the annual gift exclusion limit should be reported to the IRS as taxable gifts. A gift tax return (Form 709) is filed by the person who gives the gift. In 2024, the annual gift exclusion increases to $18,000.

Earned Income Tax Credit

Income limits and credit amounts for the earned income tax credit (EITC) for low- to middle-income taxpayers are increasing in 2024. The EITC reduces your tax bill dollar-for-dollar and, since it’s refundable, can even provide a refund if the credit exceeds your tax liability for the year. Maximum credits go to taxpayers with the lowest adjusted gross incomes and phase out as incomes increase.

For the 2024 tax year, here is the maximum adjusted gross income you can have to qualify for any EITC, broken down by filing status and the number of children or relatives you claim:

• Single, Head of Household or Widowed: 0 ($18,591), 1 ($49,084), 2 ($55,768), 3 or more ($59,899)
• Married Filing Jointly: 0 ($25,511), 1 ($56,004), 2 ($62,688), 3 or more ($66,819)

Maximum EITC amounts are also increasing. Here’s how 2024 credits compare to EITC amounts in 2023:

• 2023: 0 ($600), 1 ($3,995), 2 ($6,604), 3 or more ($7,430)
• 2024: 0 ($632), 1 ($4,213), 2 ($6,960), 3 or more ($7,830)

The Bottom Line

Inflation adjustments to the IRS tax code aren’t the same as a tax cut, but they should help bring tax rates and provisions in line with inflation’s effects on income, expenses, and economic need over the past year. If you want the full story, you can learn more about 2024 inflation adjustments in IRS Revenue Procedures 2023-34.

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