Is it possible for the IRS to leave more in our paychecks in 2024? What has changed for the 2024 federal income tax brackets and how will these apply to the tax return(s) you’ll file in 2025?
The IRS released a new bulletin, IR-2023-208, earlier this month that provides good news for many US taxpayers. The standard deduction for single US taxpayers and those who are “married filing separately” increases from $18,350 to $14,600 for 2024 income. The head of a household will get an additional $1,100 of standard deduction over 2023 or $21,900. Those who are married filing jointly will see an increase in the standard deduction from $27,700 in 2023 to $29,200 for 2024, an increase of $1,500.
Therefore, the amount of taxable income for US taxpayers will be reduced in 2024 when compared with 2023’s standard deductions.
Changes in US Tax Rates for 2024
How will changes in US tax rates allow the IRS to leave more in our paychecks in 2024? US taxpayers will be able to earn more in 2024 than they did in 2023 before moving into the next highest income tax bracket:
2024: 37% for incomes over $609,350 ($731,200 for married couples filing jointly)
2023: 37% for incomes over $578,126 ($693,751 for married couples filing jointly)
2024: 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
2023: 35% for incomes over $231,251 ($462,501 for married couples filing jointly)
2024: 32% for incomes over $191,950 ($383,900 for married couples filing jointly)
2023: 32% for incomes over $182,101 ($364,201 for married couples filing jointly)
2024: 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
2023: 24% for incomes over $95,376 ($190,751 for married couples filing jointly)
2024: 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
2023: 22% for incomes over $44,726 ($89,451 for married couples filing jointly)
2024: 12% for incomes over $11,600 ($23,200 for married couples filing jointly)
2023: 12% for incomes over $11,001 ($22,001 for married couples filing jointly)
2024: 10% for incomes under $11,500 ($23,200 for married couples filing jointly)
2023: 10% for incomes under $11,000 ($22,000 for married couples filing jointly)
In effect, the actual tax rate paid for each dollar of income in 2024 could be less than the rate a US taxpayer remitted for earnings in 2023.
In addition, the foreign earned income exclusion for US expats in 2024 will be $126,500, a $6,500 increase over the $120,000 exclusion for 2023. The gift exclusion rises to $18,000 in 2024, an increase of $1,000 over the 2023 annual gift exclusion of $17,000.
There are other ways for the IRS to leave more in our paychecks in 2024. Ask our tax professionals about savings resulting from an increase in the Alternative Minimum Tax exemption as well as an increase in the Earned Income Tax Credit for qualifying US taxpayers is three or more children.
Do You Want To Keep Even More of Your Income in 2024?
It’s a simple question, however, most US taxpayers will not take any further actions to reduce their taxable income. Allen Barron is able to help many US taxpayers and US expatriates to increase the protection of income and assets while reducing the actual amount of taxes they will have to pay through a process known as “transactional planning.” It is legal, moral and ethical process to structure your holdings and how, when and where you realize income, gains and losses in order to keep more of what you earn each year.
Do you want to pay less in taxes to the IRS, the State of California and other state and international tax authorities? Substantial changes to the US tax code will allow the IRS to leave more in our paychecks in 2024. However, the estate planning, tax, legal and accounting professionals are able to help many of our clients to maximize protections for their assets and income while reducing the taxes they pay on what they earn even further.
We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
