Benjamin Franklin once wrote, “In this world, nothing is certain except death and taxes.” A sentiment people still say 235 years later. However, the 2024 tax season has a few welcome changes that could benefit your wallet. This article will explore the adjustments pertaining to standard deductions and tax brackets and how they’ll affect you.
The Reason for the 2024 Tax Season Changes
In June 2022, inflation reached a high of 9.1%, an increase Americans hadn’t seen since the early 1980s. To fight the chokehold on consumers, the Federal Reserve hiked interest rates. In mid-January, the economy turned a corner, and the Federal Open Market Committee projected the rate would lower to 2.4% by the end of this year. While this is great news, it doesn’t erase the thirty-three months U.S. citizens spent choosing between food and paying their energy bills. To account for the strain, the IRS adjusted several tax regulations.
A Boost to Standard Deductions
Standard deductions are among the changes to be aware of. Deductions allow taxpayers to reduce the amount of their taxable income without having to specify itemized expenses. To mitigate the higher cost of living Americans experienced, the IRS boosted standard deductions:
- Standard deduction for joint filers: $27,700 (a $1,800 increase from 2022)
- Standard deduction for individual filers: $13,850 (a $900 increase from 2022)
- Standard deduction for head-of-household filers: $20,800 (a $1,400 increase from 2022
The increase doesn’t come close to covering the higher costs consumers were forced to pay in 2023. However, it’s important to note that the IRS took a holistic approach to helping taxpayers. The standard deduction adjustment is just one of many strategies they’ve used to recoup money lost to inflation.
Adjusted Tax Brackets
Another inflation-instigated IRS change is that 2023 tax brackets have been adjusted and raised by about 7%. This means some filers may get a higher refund. The IRS did this to avoid a phenomenon known as “bracket creep,” when your income increases commensurate with inflation, pushing you into a higher tax bracket even though your purchasing power remains unchanged due to inflated prices. To find your 2023 tax rate, refer to the IRS’s website.
If you don’t benefit from the tax bracket adjustments, don’t despair; other changes could ease your tax burdens this year!
Prepare for the 2024 Tax Season With DEXSTA E-Statements
At DEXSTA, we understand organizing paperwork is half the battle of doing taxes. That’s why we provide optional e-statements for our members. Unlike the mailed alternative, e-statements are better for the environment and are ordered by month, eliminating the chaos of hunting down stacks of paper. Plus, they’re easily accessed through our online portal. Prep for the 2024 tax season and beyond by enrolling in DEXSTA e-statements online!