Beginning in January, federal income tax brackets and standard deductions will be raised, which will leave some Americans with a more significant share of their paycheck.

The higher limits, announced in November, are intended to address “bracket creep,” which happens when taxpayers transition into a higher-income bracket despite their purchasing power remaining effectively unchanged. This can occur when an individual obtains a raise (i.e., a 5% higher salary) while prices accelerate at the same pace or faster. Taxpayers could be worse off financially without an adjustment despite the salary bump.

The IRS makes such adjustments every year, though during times of high inflation, the changes can be significant. The Dallas Express reported a similar adjustment in 2022 amid historically high inflation.

While inflation has eased over the past year, sitting at 3.1% annually last month, it remains above the Federal Reserve’s 2% target rate.

For 2024, the IRS is shifting tax brackets upward by roughly 5.4%. This means the inflation adjustments will apply to returns filed in 2025 for the 2024 tax year.

Standard deductions for individuals will be increased to $14,600 for the 2024 tax year, up from $13,850. For married couples, the deductions will climb to $29,200, up from $27,700, per Fox 4 KDFW.

For heads of households, these deductions are rising to $21,900, up from $20,800.

Other changes include updates to tax provisions. Families can obtain $7,830 if they have at least three qualifying children, up from $7,430.

Health flexible spending accounts will also see the maximum contribution for employees increased to $3,200 from $3,050.

Single Individual Tax Brackets

  • 10% up to $11,600
  • 12% over $11,600
  • 22% over $47,150
  • 24% over $100,525
  • 32% over $191,950
  • 35% over $243,725
  • 37% over $609,350

Joint Filer Tax Brackets:

  • 10% up to $23,200
  • 12% over $23,200
  • 22% over $94,300
  • 24% over $201,050
  • 32% over $383,900
  • 35% over $487,450
  • 37% over $731,200