2024 Tax Shake-Up: The Changes You Need to Know to Stay Ahead of the Game

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In November 2023, the IRS made updates to over 60 tax codes that affect you as an individual tax filer. These changes could impact your 2024 tax season and beyond, including updates to tax brackets, the earned income credit, standard deductions and more. Here's what you need to know about the nitty gritty numbers as you get prepared.

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Tax Rate Tables

The tax rate you pay is a direct correlation of your earnings over the previous year. Simply put, wherever you fall on the spectrum for your adjusted gross income (AGI), that will be the tax rate applied for your earnings. 

For the 2024 tax brackets, the tax rates are still in a range from 10% to 37%, but both the federal income tax brackets and the standard deduction will see an uptick. This adjustment was made in an effort to combat the impact of inflation, and could provide a bit of a break for some taxpayers. These heightened figures will be applicable to your taxes for 2024, which you'll be submitting in 2025.

See the chart below for the updated ranges. 

If you're looking for tax brackets for 2023 (filed in 2024), here are those numbers:

Capital Gains Tax

There’s a long-held understanding among investors that capital gains taxes are the norm for selling an asset for a profit. The government taxes those earnings separately from your salaried or earned income. There is a bonus, however, if you hold an asset for at least a year prior to selling you will be taxed less—it’s a “long-term capital gain tax." If you sell prior to a year it’s a “short-term capital gain tax,” which is a much more aggressive applied rate.

In 2024, the IRS is adjusting the brackets for long-term capital gains tax to allow investors to earn more before being taxed. Short-term capital gains tax rates remain the same, but the income thresholds have also been adjusted.

Below are the new brackets along with a comparison to 2023. 

Standard Deduction Increase

Also included as a direct result of inflation is an increase in standard deduction. The standard deduction is a portion of your AGI that isn’t subject to income tax. It’s common for the deduction to be increased incrementally year over year. For individuals, the deduction is now $14,600 and married couples filing jointly its $29,200. 

With this increase taxpayers could see a decrease in their tax bill if they owe or they could now be subject to a refund. 

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Child Tax Credit

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Tax payers who have children and are eligible for the Child Tax Credit, which can be up to $2,000 per qualifying dependent under 17. The only significant difference is that the refundable portion, sometimes called the additional child tax credit, is worth up to $1,700 for taxes filed in 2025. For the 2023 tax year (taxes filed in 2024), it was $1,600.

Earned Income Credit

Low to moderate income households also have an additional tax break at their disposal as a way to lower their taxable income:the Earned Income Credit.

Here’s the new ranges and credits for 2024:

Taxes 2024 and Beyond

If inflation continues to spiral out of control, we may be seeing larger-than-normal credit increases in the coming years. However, regardless of the market most of these tax codes are subject to indexing anyways (indexing is the annual review that determines their increases). Because of indexing, the likelihood of these codes changing again is high, but how much is yet to be determined.