The IRS is rolling out new income thresholds for its seven tax brackets, boosting the limits to reflect inflation this year.
The IRS is introducing new income limits for its seven tax brackets , adjusting the thresholds to account for the impact of inflation. That could provide a break to some taxpayers on their taxes in 2024.The tax agency on Thursday said it's adjusting the tax brackets upwards by 5.4%, relying on a formula based on the consumer price index, which tracks the costs of a basket of goods and services typically bought by consumers.
However, there's a common misconception that a worker will pay the highest tax rate they're subject to on every dollar of their income — that isn't the case. Instead, each tax rate is applied to your income that falls within each bracket. Your so-called marginal rate is the highest tax rate paid on your income, but your effective tax rate — a combination of the rates you pay on various parts of your income — reflects your actual tax rate.
IRS Income Limits Tax Brackets Inflation Taxpayers Taxes 2024
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