IRS New Tax Brackets 2024 – Tax Range 0-37%, Check Release Date

The Internal Revenue Service (IRS) prevents “bracket creep” by annually adjusting more than sixty tax rules for inflation. Bracket creep is when persons move into higher income tax brackets or see a decrease in the value of their credits and deductions due to inflation rather than actual increases in income.

Before 2018, the IRS utilized the Consumer Price Index (CPI) to calculate inflation. The IRS now uses the Chained Consumer Price Index (C-CPI) to modify income thresholds, deduction levels, and credit values in accordance with the Tax Cuts and Jobs Act of 2017 (TCJA).

Federal Income Tax Brackets and Rates 2024

The following income thresholds will apply in 2024 after being modified for inflation for all tax categories and payers. Ten percent, twelve percent, twenty-two percent, twenty-four percent, thirty-two percent, thirty-five percent, and thirty-seven percent of the federal income tax. Taxpayers having taxable income over $609,350 for single filers and over $731,200 for married couples filing jointly will be subject to the maximum marginal income tax rate of 37%.

Alternative Minimum Tax (AMT)

The purpose of the alternative minimum tax (AMT) was to stop high-income people from evading the individual income tax in the 1960s. High-income people must compute their tax liability twice under this parallel income tax system: once under the regular income tax system and once under the AMT.

The higher of the two must then be paid by the taxpayer. Alternative minimum taxable income (AMTI), which is the definition of taxable income used by the AMT, is a different approach. A sizeable portion of taxpayers’ income is excluded from AMTI in order to shield low- and middle-class taxpayers from the AMT. However, for taxpayers with high incomes, the exemption gradually ends. There are two rates for the AMT: 26 percent and 28 percent.

Earned Income Tax Credit (EITC)

If the filer has no children, the maximum earned income tax credit (EITC) for single and joint filers in 2024 is $632 (Table 5). For one child, the maximum credit is $4,213; for two children, it is $6,960; and for three or more children, it is $7,830.

Credit for Children (CTC)

The maximum child tax credit, which is $2,000 for each eligible child, is not inflation-adjusted. In 2024, the refundable part of the child tax credit will rise from $1,600 to $1,700 due to inflation adjustments.