Tax Brackets and Rates:

Tax brackets and rates are adjusted each year to account for inflation. For tax year 2024, the IRS has made slight changes to the income thresholds and tax rates. The tax rates remain the same, with seven brackets ranging from 10% to 37%. However, the income thresholds for each bracket have been adjusted upward to reflect inflation. Taxpayers will need to consult the updated tax tables or use tax software to determine their tax liability based on their income.

Standard Deduction:

The standard deduction is a flat amount that taxpayers can deduct from their taxable income, reducing their overall tax liability. For tax year 2024, the standard deduction amounts have increased slightly. For single filers and married individuals filing separately, the standard deduction is set at $12,950. For married couples filing jointly, the standard deduction is $25,900. And for heads of households, the standard deduction is $19,400.

Contribution Limits for Retirement Accounts:

Retirement account contributions offer individuals the opportunity to save for their future while also taking advantage of potential tax benefits. The IRS has adjusted the contribution limits for various retirement accounts for tax year 2024. For individuals with 401(k), 403(b), and most 457 plans, the contribution limit has increased to $20,200. The catch-up contribution limit for individuals aged 50 and older remains unchanged at $6,500. For those contributing to Individual Retirement Arrangements (IRAs), the limit has increased to $7,500, with a catch-up contribution of $1,000 for individuals aged 50 and older.

Health Savings Accounts (HSAs):

HSAs are tax-advantaged accounts that individuals can use to save for medical expenses. Like retirement accounts, the contribution limits for HSAs have also been adjusted for tax year 2024. The limit for individuals with self-only coverage has increased to $3,750, while the limit for individuals with family coverage has increased to $7,500. Individuals aged 55 and older can make an additional catch-up contribution of $1,000.

These are just a few of the tax inflation adjustments provided by the IRS for tax year 2024. It is important to review the full list of adjustments and consult with a tax professional to ensure compliance with the latest tax laws and regulations. Staying informed about these adjustments will help taxpayers accurately calculate their tax liability, maximize deductions, and avoid any potential penalties.