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11/11/2023

2023–2024 Tax Brackets and Federal Income Tax Rates
The seven IRS tax brackets determine how much you will owe in taxes on your income
By - John Waggoner, AARP
Published November 10, 2023

Even though we’re still in the 2023 tax year, you’re probably thinking to yourself, Gosh! I wonder what the tax brackets are for the 2024 tax year?
We’ve got you covered — and there’s actually some good news, thanks to inflation. The Internal Revenue Service (IRS) adjusts tax brackets for inflation each year, and because inflation remains high, it’s possible you could fall into a lower bracket for the income you earn in 2024. Your standard deduction — the amount you can use as a deduction on your 1040 tax return without itemizing — will also be higher.
If you start now, you can make plans to reduce your 2024 tax bill. Knowing the tax brackets for 2024 can help you implement smart tax strategies, like adjusting your income tax withholding, so you don’t get caught with a big tax bill.
How the tax brackets work
In the U.S. tax system, income tax rates are graduated, so you pay different rates on different amounts of taxable income. There are seven federal income tax rates in all: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. The more you make, the more you pay.
A tax bracket is a range of income that’s taxed at a specified rate. Importantly, your highest tax bracket doesn’t reflect how much you pay on all of your income. If you’re a single filer in the 22 percent tax bracket for 2024, you won’t pay 22 percent on all your taxable income. You will pay 10 percent on taxable income up to $11,600, 12 percent on the amount over $11,600 to $47,150, and 22 percent above that (up to $100,525).

Tax brackets for income earned in 2024
Table with 3 columns and 7 rows.
Tax rate Single filers Married filing jointly
37% $609,350 or more $731,200 or more
35% $243,725 - $609,349.99 $487,450 - $731,199.99
32% $191,950 - $243,724.99 $383,900 - $487,449.99
24% $100,525 - $191,949.99 $201,050 - $383,899.99
22% $47,150 - $100,524.99 $94,300 - $201,049.99
12% $11,600 - $47,149.99 $23,200 - $94,299.99
10% $11,599.99 or less $23,199.99 or less
Source: IRS
Married filing separately pay at same rate as singles. Source: Internal Revenue Service
Tax brackets for income earned in 2023
Table with 3 columns and 7 rows.
Tax rate Single filers Married filing jointly
37% $578,125 or more $693,750 or more
35% $231,250 - $578,124.99 $462,500 - $693,749.99
32% $182,100 - $231,249.99 $364,200 - $462,499.99
24% $95,375 - $182,099.99 $190,750 - $364,199.99
22% $44,725 - $95,374.99 $89,450 - $190,749.99
12% $11,000 - $44,724.99 $22,000 - $89,449.99
10% $10,999.99 or less $21,999.99 or less
Source: IRS

Married filing separately pay at same rate as singles. Source: Internal Revenue Service
In addition, the standard deduction is $14,600 for single filers for the 2024 tax year, up from $13,850 for 2023. The standard deduction for couples filing jointly is $29,200 in 2024, up from $27,700 in the 2023 tax year. The standard deduction is the fixed amount the IRS allows you to deduct from your annual income even if you don’t itemize your tax return. The lower your taxable income is, the lower your tax bill.
There’s even more good news for older taxpayers. Each joint filer 65 and over can increase the standard deduction by $1,550 apiece, for a total of $3,100 if both joint filers are 65-plus. In total, a married couple 65 or older would have a standard deduction of $32,300. You can also itemize individual tax deductions, for things like charitable donations, but they need to add up to more than the standard deduction to make itemizing worthwhile.
Estimate Your 2023 Taxes
Your taxes for 2023 are due April 15, 2024; your taxes for the 2024 tax year are due April 15, 2025. If you have been hit with a big tax bill in the past, you should talk with a tax adviser about how to reduce your next tax bill. It’s probably easier to have a little more money withheld from each paycheck than to face a big tax bill on April 15. A good first step is to look at how much tax is being withheld from your paycheck. The IRS has a free withholding estimator that can tell you how much you should have taken out.

10/31/2022

Nine million people who missed expanded tax benefits still have time to file

More than nine million people may qualify for tax benefits but didn’t claim them by filing a 2021 federal income tax return. Many in this group may be eligible to claim some or all of the 2021 recovery rebate credit, the child tax credit, the earned income tax credit and other tax credits. These and other tax benefits were expanded under last year’s American Rescue Plan Act and other recent legislation.

The only way to get the valuable benefits is to file a 2021 tax return.
Often, people can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don’t normally need to file a tax return should do so for 2021, even if they haven’t been required to file in recent years.

Eligible people can file a tax return even if they don’t receive a letter. There’s no penalty for a refund claimed on a tax return filed after the regular April 2022 tax deadline.

The expanded tax benefits include:

An expanded child tax credit. Families can claim this credit, even if they received monthly advance payments during the last half of 2021. The total credit can be as much as $3,600 per child.

A more generous earned income tax credit. The law boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children. The credit can be as much as $1,502 for workers with no qualifying children, $3,618 for those with one child, $5,980 for those with two children and $6,728 for those with at least three children.

The recovery rebate credit. Those who missed out on last year’s third round of Economic Impact Payments may be eligible to claim the RRC. Often referred to as stimulus payments, this credit can help eligible people whose third payment was less than the full amount, including those who welcomed a child in 2021. The maximum credit is $1,400 for each qualifying adult, plus $1,400 for each eligible child or adult dependent.

An increased child and dependent care credit. Families who have care expenses for a child or dependent so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.

A deduction for gifts to charity. Most tax-filers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individuals can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.

04/19/2022

Taxpayers who owe and missed the April 18 filing deadline should file now to limit penalties and interest; not too late to claim the Child Tax Credit for 2021

WASHINGTON — The Internal Revenue Service encourages taxpayers who missed Monday’s April 18 tax-filing deadline to file as soon as possible. While taxpayers due a refund receive no penalty for filing late, those who owe and missed the deadline without requesting an extension should file quickly to limit penalties and interest.

Families who don’t owe taxes to the IRS can still file their 2021 tax return and claim the Child Tax Credit for the 2021 tax year at any point until April 15, 2025, without any penalty. This year also marks the first time in history that many families with children in Puerto Rico will be eligible to claim the Child Tax Credit, which has been expanded to provide up to $3,600 per child.

File without penalty to get a tax refund

Some people may choose not to file a tax return because they didn't earn enough money to be required to file. But they may miss out on receiving a refund. The only way to get a refund is to file a tax return. There’s no penalty for filing after the April 18 deadline if a refund is due.

While most tax credits can be used to reduce the tax owed, there are a few credits that allow taxpayers to receive money beyond what they owe. The most common examples of these refundable credits are the Earned Income Tax Credit, Child and Dependent Care Credit and Child Tax Credit. Those who don’t usually file and didn't qualify for a third-round Economic Impact Payment or got less than the full amount may be eligible to claim the 2021 Recovery Rebate Credit when they file their 2021 tax return. Taxpayers often fail to file a tax return and claim a refund for these credits and others for which they may be eligible.

Generally, the IRS issues nine out of 10 refunds in less than 21 days for taxpayers who e-file and choose direct deposit. However, it’s possible a tax return may require additional review or take longer. The IRS processes paper tax returns in the order they are received.

Taxpayers can track their refund using the Where's My Refund? tool on IRS.gov, IRS2Go or by calling the automated refund hotline at 800-829-1954. Taxpayers need the primary Social Security number on the tax return, the filing status and the expected refund amount. The refund status information updates once daily, usually overnight, so there’s no need to check more frequently.

File to reduce penalties and interest

Taxpayers should file their tax return and pay any taxes they owe as soon as possible to reduce penalties and interest. An extension to file is not an extension to pay. An extension to file provides an additional six months with a new filing deadline of October 17. Penalties and interest apply to taxes owed after April 18 and interest is charged on tax and penalties until the balance is paid in full.

Filing and paying as much as possible is key because the late-filing penalty and late-payment penalty add up quickly.

Even if a taxpayer can't afford to immediately pay the full amount of taxes owed, they should still file a tax return to reduce possible delayed filing penalties. The IRS offers a variety of options for taxpayers who owe the IRS but cannot afford to pay.

Usually, the failure to file penalty is 5% of the tax owed for each month or part of a month that a tax return is late, up to five months, reduced by the failure to pay penalty amount for any month where both penalties apply. If a return is filed more than 60 days after the due date, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is less.

The failure to pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month until the tax is fully paid or until 25% is reached. The rate is subject to change. For more information see IRS.gov/penalties.

Taxpayers may qualify for penalty relief if they have filed and paid timely for the past three years and meet other important requirements, including paying or arranging to pay any tax due. For more information, see the first time penalty abatement page on IRS.gov.

Understand the different types of penalties, how to avoid getting a penalty, and what you need to do if you get one.

04/13/2022

Issue Number: Tax Tip 2022-57
Here’s how to tell the difference between a hobby and a business for tax purposes

A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit. Many people engage in hobby activities that turn into a source of income. However, determining if that hobby has grown into a business can be confusing.

To help simplify things, the IRS has established factors taxpayers must consider when determining whether their activity is a business or hobby.

These factors are whether:
The taxpayer carries out activity in a businesslike manner and maintains complete and accurate books and records.

The taxpayer puts time and effort into the activity to show they intend to make it profitable.

The taxpayer depends on income from the activity for their livelihood.

The taxpayer has personal motives for carrying out the activity such as general enjoyment or relaxation.

The taxpayer has enough income from other sources to fund the activity.

Losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.

There is a change to methods of operation to improve profitability.

Taxpayer and their advisor have the knowledge needed to carry out the activity as a successful business.

The taxpayer was successful in making a profit in similar activities in the past.

Activity makes a profit in some years and how much profit it makes.

The taxpayer can expect to make a future profit from the appreciation of the assets used in the activity.
All factors, facts, and circumstances with respect to the activity must be considered. No one factor is more important than another.

If a taxpayer receives income from an activity that is carried on with no intention of making a profit, they must report the income they receive on Schedule 1, Form 1040, line 8.

More Information:
Publication 17, Your Federal Income Tax
Publication 525, Taxable and Nontaxable Income
Publication 535, Business Expenses
Publication 334, Tax Guide for Small Business, For Individuals Who Use Schedule C