Inflation drives up tax bracket limits in 2024

Inflation-adjusted amounts in the Tax Code are predicted to increase 5.4% in 2024, according to a new report from Bloomberg Tax.

While that’s a slight decrease from the 7.1% increase this year, it’s close to double the 2022 increase of 3%. Bloomberg Tax released the report Wednesday after the U.S. Bureau of Labor Statistics issued its most recent consumer price index, which rose 0.6% in August after increasing 0.2% in July.

The report anticipates significant year-over-year increases in some deductions, with the foreign earned income exclusion going from $120,000 to $126,500, and the annual exclusion for gifts growing from $17,000 to $18,000, enabling taxpayers to up their gifts without worrying about tax implications.

The Blomberg report takes into account the tax changes made under last year’s Inflation Reduction Act and the SECURE 2.0 Act. For the Inflation Reduction Act, changes include an increase in the Section 4611(c) hazardous substance superfund financing rate and a bump up in the Section 179D deduction for energy-efficient commercial building property as long as new wage and apprenticeship requirements are met. For the SECURE 2.0 Act, changes include an increase in the wage limitation amount for the additional Section 45E credit for small employer pension plan startup costs from $100,000 to $140,000.

“For the second year in a row, high U.S. inflation has contributed to a significant increase in inflation-adjusted amounts in the tax code,” said Heather Rothman, vice president of analysis and content at Bloomberg Tax & Accounting, in a statement. “Once again, our annual report provides actionable projections for tax professionals and taxpayers to begin planning for the upcoming year ahead of the official IRS announcement.”

This report outlines a number of projections, including penalty amounts for failure to file, retirement planning figures, and income threshold, deduction and exemption amounts.

Some of the major adjustments, comparing the 2023 amounts and 2024 projections, include:

Individual income tax rate brackets

Married Filing Jointly and Surviving Spouses
2023 Tax Rate Bracket Income Ranges	Projected 2024 Tax Rate Bracket Income Ranges
10% – $0 to $22,000	10% – $0 to $23,200
12% – Over $22,000 to $89,450	12% – Over $23,200 to $94,300
22% – Over $89,450 to $190,750	22% – Over $94,300 to $201,050
24% – Over $190,750 to $364,200	24% – Over $201,050 to $383,900
32% – Over $364,200 to $462,500	32% – Over $383,900 to $487,450
35% – Over $462,500 to $693,750	35% – Over $487,450 to $731,200
37% – Over $693,750	37% – Over $731,200

Unmarried Individuals (other than Surviving Spouses and Heads of Households)
2023 Tax Rate Bracket Income Ranges	Projected 2024 Tax Rate Bracket Income Ranges
10% – $0 to $11,000	10% – $0 to $11,600
12% – Over $11,000 to $44,725	12% – Over $11,600 to $47,150
22% – Over $44,725 to $95,375	22% – Over $47,150 to $100,525
24% – Over $95,375 to $182,100	24% – Over $100,525 to $191,950
32% – Over $182,100 to $231,250	32% – Over $191,950 to $243,725
35% – Over $231,250 to $578,125	35% – Over $243,725 to $609,350
37% – Over $578,125	37% – Over $609,350

Standard deduction

Filing Status	2023 Standard Deduction	Projected 2024 Standard Deduction
Married Filing Jointly/Surviving Spouses	$27,700	$29,200
Heads of Household	$20,800	$21,900
All Other Taxpayers	$13,850	$14,600

Alternative minimum tax

Filing Status	2023 AMT Exemption Amount	Projected 2024 AMT Exemption Amount
Married Filing Jointly/Surviving Spouses	$126,500	$133,300
Unmarried Individuals (other than Surviving Spouses)	$81,300	$85,700
Married Filing Separately	$63,250	$66,650
Estates and Trusts	$28,400	$29,900