The Inflation has pushed the tax brackets higher. Don’t forget to check out the changes in your local state as well
Congressional action from the Reagan era is about to provide some relief to taxpayers, Axios’ Emily Peck and Herb Scribner report.
Federal tax brackets will be about 7% higher for the 2023 tax year (filed in 2024). The standard deduction is going up too.
Zoom out: The IRS adjusts tax brackets every year to ward off “bracket creep,” when inflation pushes you into a too-high tax bracket.
The bracket adjustments are much higher than usual this year because of inflation.
Brackets weren’t adjusted annually like this until Congress codified the annual inflation adjustments as part of the Reagan tax cuts in 1981.
Between the lines: This makes a bigger difference the more you earn.
The 10% marginal rate threshold is going from $10,275 to $11,000.
The 37% rate threshold is going from $539,901 to $578,126