Let’s unravel the mystery of tax brackets and deductions! It’s not as complicated as it may seem. Here’s a straightforward breakdown:
In 2023, the IRS has set up seven tax brackets to determine how much of your income is taxed at different rates. But don’t fret! Your top tax rate only applies to the part of your income that surpasses each bracket’s threshold. Take a look at the table below:
| Tax Rate | Single Filers | Married Filing Jointly |
|---|---|---|
| 10% | $0 to $11,000 | $0 to $22,000 |
| 12% | $11,000 to $44,725 | $22,000 to $89,450 |
| 22% | $44,725 to $95,375 | $89,450 to $190,750 |
| 24% | $95,375 to $182,100 | $190,750 to $364,200 |
| 32% | $182,100 to $231,250 | $364,200 to $462,500 |
| 35% | $231,250 to $578,125 | $462,500 to $693,750 |
| 37% | $578,125 and up | $693,750 and up |
Source – IRS
But wait, there’s more! The IRS also offers a Standard deduction 2023, which is like a tax-free slice of your income. Most folks go for this standard deduction, but some choose to itemize instead. For 2023, the standard deduction is $13,850 for single filers and $27,700 for married couples filing jointly.
IRS - Tax Brackets for 2024
Now, let’s fast forward to 2024. The IRS has made adjustments to the income thresholds for each bracket to account for inflation. Your paycheck might look a bit bigger because of it! Here are the numbers for 2024:
| Tax Rate | Single Filers | Married Filing Jointly |
|---|---|---|
| 10% | $0 to $11,600 | $0 to $23,200 |
| 12% | $11,600 to $47,150 | $23,200 to $94,300 |
| 22% | $47,150 to $100,525 | $94,300 to $201,050 |
| 24% | $100,525 to $191,950 | $201,050 to $383,900 |
| 32% | $191,950 to $243,725 | $383,900 to $487,450 |
| 35% | $243,725 to $609,350 | $487,450 to $731,200 |
| 37% | $609,350 and up | $731,200 and up |
Source – IRS
And don’t forget about the Standard deduction 2024, which has also increased! It’s now $14,600 for single filers and $29,200 for married couples filing jointly in 2024.
Voila! Understanding your tax brackets and deductions doesn’t have to be intimidating. With these clear tables and explanations, you’re all set to tackle your taxes like a pro. Happy filing!
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