Go-to guidance on latest figures now available
An early glimpse of the U.S. income tax picture for 2024, as projected under current tax law, is now available from Wolters Kluwer Tax & Accounting (TAA). The new information includes estimated ranges for each 2024 tax bracket as well as projections for a growing number of inflation-sensitive tax figures, such as the standard deduction. These annual projections are based on the relevant inflation data recently reported by the U.S. Department of Labor.
Key Tax Savings, Inflation-Adjusted Projections for 2024
Projections based on the Department of Labor’s inflation figures for the 12-month period between August 31, 2022 and August 31, 2023 suggest most taxpayers will experience significant inflation-driven “tax cut” savings in comparison to their 2023 tax return filings. An example of how taxpayers will benefit on 2024 tax returns, when compared to 2023 tax returns based on the inflation adjustments provided under the current tax code, follows:
- Because of the income ranges bracketing, the inflation adjustments will provide an effective “tax cut” by taxing more income at lower marginal tax rates. A single filer with taxable income of $50,000 should owe $254.50 less next year due to the adjustments to the income tax rate brackets between 2023 and 2024.
- A married couple filing jointly with a total taxable income of $130,000 should pay $509 less income taxes for 2024 tax returns than they will on the same income for 2023 because of indexing of their tax brackets for 2024.
- The additional standard deduction for those 65-years-old and older or who are blind will increase $50 to $1,550 for 2024 tax returns, with an increase of $100 to $1,950 for single aged 65 or older or blind filers.
Other Inflation-adjusted Tax Estimates for 2024
- The standard deduction for single, married filing jointly, and married filing separately filers is expected to rise for 2024: at $14,600, $29,200 and $14,600, respectively, up from $13,850, $27,700 and $13,850. The standard deduction for heads of household is expected to rise $1,100 to $21,900 for 2024. Any increase in the standard deduction, of course, can produce lower taxes by decreasing the taxpayer’s taxable income.
- The estate and gift tax applicable exemption was increased by the Tax Cuts and Jobs Act. The amount has been adjusted for inflation by Congress and is now projected at $13,610,000 for 2024. A spousal portability election can now effectively protect double that amount against estate and gift tax ($27,220,000 for 2024). The annual gift tax exclusion for 2024 is projected to increase to $18,000 for gifts to each recipient.
- The 2024 foreign earned income exclusion will increase to $126,500 for 2024, up from $120,000 for 2023.
Wolters Kluwer Tax & Accounting 2024 Tax Projections*
As cited earlier, Wolters Kluwer TAA projections for indexed amounts are based on the relevant inflation data released by the U.S. Department of Labor. The IRS usually releases official numbers by November each year.
Tax bracket projections are provided for illustrative purposes only and should not be used for income tax returns or other federal income tax related purposes until confirmed by the IRS later this year and are subject to amendment by Congress during the rest of 2023, or even retroactively during 2024.
Married Filing Jointly (& Surviving Spouse)
| Tax Rate | 2024 Taxable Income | 2023 Taxable Income |
| 10% | $0 - $23,200 | $0 - $22,000 |
| 12% | $23,201 - $94,300 | $22,001 - $89,450 |
| 22% | $94,301 - $201,050 | $89,451 - $190,750 |
| 24% | $201,051 - $383,900 | $190,751 - $364,200 |
| 32% | $383,901 - $487,450 | $364,201 - $462,500 |
| 35% | $487,451 - $731,200 | $462,501 - $693,750 |
| 37% | $731,200+ | $693,750+ |
Unmarried Individuals (Other Than Surviving Spouses and Heads of Households)
| Tax Rate | 2024 Taxable Income | 2023 Taxable Income |
| 10% | $0 - $11,600 | $0 - $11,000 |
| 12% | $11,601 - $47,150 | $11,001 - $44,725 |
| 22% | $47,151 - $100,525 | $44,726 - $96,375 |
| 24% | $100,526 - $191,950 | $95,376 - $182,100 |
| 32% | $191,951 - $243,725 | $182,101 - $231,250 |
| 35% | $243,726 - $609,350 | $231,251 - $578,125 |
| 37% | $609,350+ | $578,125+ |
Head of Household
| Tax Rate | 2024 Taxable Income | 2023 Taxable Income |
| 10% | $0 - $16,550 | $0 - $15,700 |
| 12% | $16,551 - $63,100 | $15,701 - $59,850 |
| 22% | $63,101 - $100,500 | $59,851 - $95,350 |
| 24% | $100,501 - $191,950 | $95,351 - $182,100 |
| 32% | $191,951 - $243,700 | $181,101 - $231,250 |
| 35% | $243,701 - $609,350 | $231,251 - $578,100 |
| 37% | $609,350+ | $578,100+ |
Married Individuals Filing Separate Returns
| Tax Rate | 2024 Taxable Income | 2023 Taxable Income |
| 10% | $0 - $11,600 | $0 - $11,000 |
| 12% | $11,601 - $47,150 | $11,001 - $44,725 |
| 22% | $47,151 - $100,525 | $44,726 - $95,375 |
| 24% | $100,526 - $191,950 | $95,376 - $182,100 |
| 32% | $191,951 - $243,725 | $182,101 - $231,250 |
| 35% | $243,726 - $365,600 | $231,251 - $346,875 |
| 37% | $365,600+ | $346,875+ |
Standard Deduction Amounts
| Filing Status | 2023 | 2024 | Increase |
| Married Filing Jointly (& Surviving Spouse) |
$27,700 | $29,200 | $1,500 |
| Married Filing Separately | $13,850 | $14,600 | $750 |
| Single | $13,850 | $14,600 | $750 |
| Head of Household | $20,800 | $21,900 | $1,100 |
Standard Deduction for Dependents
| 2023 | 2024 | Increase |
| $1,250 | $1,300 | $50 |
Gift Tax Exclusion
| 2023 | 2024 | Increase |
| $17,000 | $18,000 | $1,000 |
* These numbers are projected for the 2024 tax year and have not been confirmed by the Internal Revenue Service (www.irs.gov). They are provided for illustrative purposes only and should not be used for income tax returns or other federal income tax related purposes until confirmed by the IRS later this year, and as subject to amendment by Congress during the rest of 2023, or even retroactively during 2024.
Inflation Adjustments - Background
Since the late 1980s, the U.S. Tax Code (Code) has required that federal income tax brackets be adjusted for inflation annually, and other inflation adjustments have been inserted into the Internal Revenue Code in recent years with increasing frequency. For example, the Code now requires over 50 other inflation-driven computations to determine deduction, credit and exclusion amounts in addition to the 50 separate computations needed to inflation-adjust the tax bracket schedules each year. Estimates for any of the inflation-adjusted tax figures for 2024, of course, are also necessarily subject to any changes to the tax law that may be made by Congress over the course of the next year.
PLEASE NOTE: The content of this media alert is designed to provide accurate and authoritative information regarding the subject matter covered. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering legal, accounting or other professional services.
