“Discover Your New Tax Bracket for 2024: IRS Announces Updates!

The Internal Revenue Service (IRS) has announced the new income tax brackets for 2024. This comes as part of an effort to update and simplify the tax code, which has grown increasingly complicated over the years. The new brackets, which are based on a 400% marginal tax rate, are set to go into effect on January 1, 2024. For incomes up to $85,500 for individuals and $171,000 for couples, the new brackets simplify the existing structure by grouping incomes into the following tiers: 0%, 10%, 25%, and 35%. This structure eliminates the current six brackets that range from 10% to 37%, which have been in place since 2018. In an effort to help taxpayers, the IRS has also split the 15% tax bracket in half to provide an 8% and a 13% rate. This is intended to more evenly spread out the burden of taxes, particularly for lower-income households. In addition to the rate adjustments, the new plan also increases the current standard deduction from $12,200 to $15,000. This will not only make the filing process easier for many taxpayers, but also, along with the new tax rates, reduce taxes for many taxpayers. Finally, the plan includes an increase in the current Child Tax Credit from $2,000 to $3,000. The current Earned Income Tax Credit (EITC) also increase from $2,000 to $3,000, while the Phaseout Threshold for the EITC is set to increase from $50,000 to $70,000, allowing more individuals to qualify for the credit. Overall, the new tax plan is an effort to make the tax code simpler and fairer. It reduces the tax burden for many low- and middle-income taxpayers, while making filing taxes easier. The new tax rate structure and credit increases are set to go into effect on January 1, 2024.