The IRS has unveiled its annual inflation adjustments for the 2024 tax year, featuring a slight uptick in income thresholds for each bracket compared to 2023.
Your taxable income and filing status determine both the tax rate and bracket that apply to you, outlining the amount you'll owe on different portions of your income.
For 2024, the seven federal income tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Below, CNBC Select breaks down the updated tax brackets for 2024 and what you need to know about them.
What we'll cover
2024 tax brackets (for taxes filed in 2025)
The tax inflation adjustments for 2024 rose by 5.4% from 2023 (which is slightly lower than the 7.1% increase the 2023 tax year had over the 2022 rates).
In 2024, the top tax rate of 37% applies to those earning over $609,350 for individual single filers, up from $578,125 last year. Meanwhile, the lowest threshold of 10% applies to those making $11,600 or less, up from $11,000 in 2023.
That means how much you pay in taxes could be higher or lower this year than in 2023. For example, let's say you earned $45,000 in taxable income as a single filer in 2023. How your income is taxed gets broken down into three tax brackets:
- 10% for the first $11,000 of your income — which comes down to $1,100
- 12% for any income between $11,001 to $44,725 ($33,724) — which comes down to $4,046.88
- 22% for the remaining income between $44,726 to 95,375 ($274) — which comes down to $60.28
- This adds up to $5,207.16 in taxes for the 2023 calendar year.
Now, let's say you're earning $45,000 in 2024. Your tax bracket will look a little different.
- 10% for the first $11,600 of your income — which comes down to $1,160
- 12% for any income between $11,601 to $47,150 ($33,399) — which comes down to $4,007.88
- This adds up to $5,167.88 in taxes for the 2024 calendar year.
That's about $40 less in taxes in 2024 than in 2023.
Below, are the brackets and rates that apply to income earned in 2024.
2024 Tax Brackets (Taxes Due 2025)
| Tax Rate | Single | Married filing jointly | Married filing separately | Head of household |
|---|---|---|---|---|
| 10% | $11,600 or less | $23,200 or less | $11,600 or less | $16,550 or less |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 | $11,601 to $47,150 | $16,551 to $63,100 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 | $47,151 to $100,525 | $63,101 to $100,500 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 | $100,526 to $191,950 | $100,501 to $191,950 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 | $191,951 to $243,725 | $191,951 to $243,700 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 | $243,726 to $365,600 | $234,701 to $609,350 |
| 37% | Over $609,350 | Over $731,200 | Over $365,600 | Over $609,350 |
Source: IRS.gov
2023 tax brackets (for taxes filed in 2024)
Taxes for the 2024 year are due by April 15, 2024, or October 2024 with a tax extension. If you prefer to file without the help of a tax professional, TurboTax and H&R Block topped CNBC Select's list of top tax software based on cost, user experience, the amount of expertise available to customers, and Better Business Bureau rating.
TurboTax
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Costs may vary depending on the plan selected - click "Learn More" for details
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TurboTax Free Edition. ~37% of taxpayers qualify. Form 1040 + limited credits only.
Mobile app
Yes
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Available with some pricing and filing options
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H&R Block
Cost
Costs may vary depending on the plan selected (Free Online, Deluxe, Premium, or Self-Employed) - click "Learn More" for details
Free version
Yes (for simple returns only)
Mobile app
Yes
Live support
Available with some pricing and filing options
Terms apply.
Below, are the brackets and rates that apply to taxable income earned in 2023.
2023 Tax Brackets (Taxes Due 2024)
| Tax Rate | Single | Married filing jointly | Married filing separately | Head of household |
|---|---|---|---|---|
| 10% | $11,000 or less | $22,000 or less | $11,000 or less | $15,700 or less |
| 12% | $11,001 to $44,725 | $22,001 to $89,450 | $11,001 to $44,725 | $15,701 to $59,850 |
| 22% | $44,726 to 95,375 | $89,451 to $190,750 | $44,726 to $95,375 | $59,851 to $95,350 |
| 24% | $95,376 to $182,100 | $190,751 to $364,200 | $95,376 to $182,100 | $95,351 to $182,100 |
| 32% | $182,101 to $231,250 | $364,201 to $462,500 | $182,101 to $231,250 | $182,101 to $231,250 |
| 35% | $231,251 to $578,125 | $462,501 to $693,750 | $231,251 to $346,875 | $231,251 to $578,100 |
| 37% | Over $578,125 | Over $693,750 | Over $346,875 | Over $578,100 |
Source: IRS.gov
What is a marginal tax rate?
Your marginal tax rate is the highest tax rate you pay on your income. Because the IRS taxes different tiers of your income at progressive rates, you'll never pay a single rate on all of your income.
For example, if you're a single filer who earned $70,000 in income in 2023, your marginal tax rate is 22% because you earned income that falls within the $44,276 to $95,375 tax bracket. But only $25,724 of your income ($70,000 - $44,27) is taxed at 22%. The taxable income you earned from $11,001 to $44,725 is taxed at 12%, and the income you earned up to $11,000 is taxed at 10%.
What is an effective tax rate?
Effective tax rate refers to the average percentage of your taxable income that you owe in federal taxes. To calculate this amount, you divide how much you owe by your total taxable income.
Here's how this looks using the example of a single filer with $70,000 of taxable income:
- 10% for the first $11,000 of their income, or $1,100.
- 12% for any income between $11,001 to $44,725, or $4,046.88.
- 22% for any income between $44,726 and $70,000, or $5,560.28.
This adds up to $10,707.16 worth of taxes owed. When you divide that by $70,000 (the total taxable income), you get an effective tax rate of 15.29%.
How do you reduce the amount of taxes you owe?
If you want to reduce how much you owe in taxes, you can start by looking at any available tax credits you can claim. Tax credits offer a direct reduction in the amount of taxes you owe, providing a dollar-for-dollar decrease in your tax liability. So, for example, if you owe $2,000 in taxes and qualify for a $500 tax credit, your tax liability gets reduced to $1,500. You can find details on tax credit options on the IRS website, including:
- The Earned Income Tax Credit
- Child Tax Credit and Child and Dependent Care Tax Credit
- American Opportunity Tax Credit
While tax credits directly reduce your tax bill, tax deductions lower your taxable income by letting you subtract certain expenses or contributions from what the IRS can tax. These deductions can take the form of a standard deduction — a fixed amount reduction — or an itemized deduction — which entails listing eligible expenses. Deductions are based on expenses such as mortgage interest, charitable contributions or educational expenses.
For example, if you have student loans, qualified borrowers can deduct interest that they paid on those loans. You can also claim deductions for money contributed to a qualifying pre-tax retirement account, such as an employer-sponsored 401(k) or traditional IRA. However, you'll be subject to income tax on your withdrawals.
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Bottom line
As the IRS releases 2024's tax inflation adjustments, it's a good opportunity to proactively plan for how much you could owe in 2025. If you find that you'll owe less, that gives you space to allocate your funds elsewhere. More information about the update can be found on the IRS.gov website.
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