IRS Changes For 2024 Can Increase Paychecks, Lower Taxes For Americans

New IRS tax brackets and increased standard deductions that went into effect Monday could lead to bigger paychecks and lower taxes.

Americans across the country are still dealing with inflation and high prices, but IRS changes for 2024 could lead to larger paychecks and lower taxes for many, Axios reports.

According to the outlet, new IRS tax brackets and increased standard deductions went into effect on Jan. 1. Other tax inflation adjustments include the mileage rate increase and higher contribution limits for tax-deferred retirement plans.

The IRS has adjusted the tax brackets for the 2024 tax year. The marginal tax rate is 10% for individuals making $11,600 or less and married couples filing together making $23,200 or less. The highest rate is 37% for individuals making 609,350 or more and couples earning $731,200 or more.

The outlet reports that the changes attempt to stop what is known as bracket creep, which occurs when inflation pushes taxpayers into a higher income tax bracket without an increase in real income.

Additionally, the standard deduction for married couples filing jointly for the 2024 tax year will be $29,000, a $1,500 increase for the 2023 tax year. For single taxpayers, the deduction will be $14,600, a $750 increase from 2023. For heads of households, the decision is set at $21,900, an $1,100 increase from the 2023 tax year.

IRA and 401(K) contributions limits will also increase this year. The IRS announced that Americans can contribute up to 23,000 into their 401(k), 403(b), and most 457 plans—a $500 increase from the 2023 limit. The limit on IRA contributions increased by $500 from 2023 to $7,000.

The outlet reports that the IRS raised the limit for contributions to health flexible spending arrangements to $3,200 in 2024, up from $3,050 for 2023.

The IRS is opening its pilot program for free, secure electronic tax filing run by the IRS this year. The pilot program will be limited to tax filers with relatively simple tax returns reporting only certain types of income and claiming limited credits and deductions. It will be eligible for residents of Alaska, Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.