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New IRS Tax Rates for 2024

New IRS Tax Rates for 2024

Living in California, known as the Golden State, comes with the responsibility of understanding your state income tax. At Dallo Law Group, we provide a comprehensive overview of California’s tax brackets for 2024, shedding light on rates, deductions, and credits that can potentially minimize your tax liability.

If It is no big surprise that the result of our nation’s state of inflation has pushed the IRS to impose some changes to the federal income tax rates thresholds for 2024. Everyone should have some understanding of what to expect, why the tax brackets have changed, and adequately prepare for what lies ahead in the new year.

Annually you can expect an announcement for some kind of changes from the IRS; however, this past November the information released was notable. Namely, the annual inflation adjustments report showed a 5.4% bump in income thresholds to reach each new IRS tax bracket. Taxpayers can now expect an increase to a higher tax rate in 2024 without much change to their income our money buying power.

California’s income tax structure comprises nine brackets, featuring a maximum marginal income tax rate of 12.3%. These brackets correspond to specific income ranges based on your filing status. For example, if you are single with a taxable income of $50,000, you fall into the 8% tax bracket. This means paying 1% on the initial $10,099, 2% on the subsequent $13,843, 4% on the following $13,846, 6% on the next $14,667, and finally, 8% on the remaining $7,545. In this scenario, your total state income tax would be $2,811.71.

 

The New IRS Tax Rates for 2024

It is important to mention that these changes will affect your 2024 income which you will see when
you file in 2025. Therefore, your 2023 tax return will have the old rates in place. Furthermore, the
IRS is amending over 60 tax provisions for 2024, which will also include a 5% increase to the
standard deduction.

Here are the changes you can expect for the standard deduction as compared to what is currently in place:

  • The 2024 tax year standard deductions will increase to $29,200 for married couples filing jointly, up $1,500 from $27,700 for the 2023 tax year.
  • The standard deduction for single taxpayers will be, $14,600, an increase from $13,850 in 2023.lHeads of household will see a $1,100 increase to $21,900 compared to 2023's $20,800.

As for the 2024 tax rates, you can expect:

  • 10% for incomes of single individuals with incomes of $11,600 or less or $23,200 for married
    couples filing jointly
  • 12% for incomes over $11,600 or $23,200 for married couples filing jointly
  • 22% for incomes over $47,150 or $94,300 for married couples filing jointly
  • 24% for incomes over $100,525 or $201,050 for married couples filing jointly
  • 32% for incomes over $191,950 or $383,900 for married couples filing jointly
  • 35% for incomes over $243,725 or $487,450 for married couples filing jointly
  • 37% for incomes over $609,350 or $731,200 for married couples filing jointly

In nutshell, these income thresholds are roughly 5.5% to 6% higher than those in place for the 2023
tax season.

 

For married couples filing separately and head of household filers, here are the breakdowns:

  • 10% for incomes up to $11,600 for married filing separately and not over $16,500 for head of
    households

  • 12% for incomes over $11,600 but not over $47,150 for married filing separately; and over $16,550 but not over $63,100 for head of household

  • 22% for incomes over $47,150 but not over $100,525 for married filing separately; and over $63,100 but not over $100,500 for head of household

  • 24% for incomes $100,525 but not over $191,950 for married filing separately; and over $100,500 but not over $191,950 for head of household

  • 32% for incomes over $191,950 but not over $243,725 for married filing separately; and over $191,950 but not over $243,700 for head of household

  • 35% for incomes over $243,725 but not over $365,600 for married filing separately; and over $243,700 but not over $609,350 for head of household

  • 37% for incomes over $365,600 for married filing separately; and over $609,350 for head of household

 

Here are the breakdowns for the head of the household:

  • 1% of taxable income. 
  • 2% of the amount over $20,839. 
  • 4% of the amount over $49,371. 
  • 6% of the amount over $63,644. 
  • 8% of the amount over $78,765. 
  • 9.3% of the amount over $93,037. 
  • 10.3% of the amount over $474,824. 
  • 11.3% of the amount over $569,790. 
  • 12.3% of the amount over $949,649. 

Lastly, for taxpayers with flexible spending accounts (FSA) and health savings accounts (HSA) the
new rules state a higher percentage of pretax income can be put aside, thus saving on taxes for those funds. The new limits allow contributions of up to $3,200 for FSAs and $4,150 for HSAs starting in 2024.

 

Key Points About California State Tax 

  • California’s tax filing deadline aligns with the federal deadline (April 15, 2024). 
  • Check your state tax refund status online. 
  • Request a one-time, 30-day delay if unable to pay on time. 
  • Payment plans are available for tax bills under $25,000. 
  • Explore the state’s offer in compromise program for potential debt reduction. 

 

Contacting a Professional Tax Attorney in San Diego

The importance of knowing the tax rates including how and why they are changing is for the elimination of surprises and to have good preparedness in place. Our professionals at Dallo Law Group can provide expert insights on the new IRS tax rates for 2024. You will be able to navigate these changes seamlessly with the guidance from our tax attorneys and seasoned CPAs. Knowing the tax code inside and out is our number one priority. In addition, the impact of new tax changes can significantly change personal and business finances. You do not want to be left in the dark when taxes come due.

All said, anytime the IRS makes changes to the rules, that undoubtedly creates confusion and leaves some taxpayers in the dark. At Dallo Law Group, our tailored experience can help you understand and plan well for what is to come. 2024 tax rate adjustments can not only affect your annual tax return, but also your social security, FSA, 401K, and IRA accounts. Therefore, what looks like just a slight increase in rates can in fact make a big difference in the long run. Contact us today, our tax attorneys at Dallo Law Group are here to assist with the right guidance.