The recent surge in the Consumer Price Index (CPI) has sent ripples through our economy, impacting not only our wallets but also our tax forms.
In August, the CPI climbed by 0.6%, leading to upward adjustments in tax brackets and key thresholds.
Inflation’s Role in Tax Code Adjustments
Tax & Accounting has projected that inflation-adjusted amounts in the tax code will rise by 5.4% in 2023, a slight decrease from the 7.1% increase experienced by taxpayers in 2022 but nearly double the 3% increase seen in 2022.
The vice president of analysis and content tax and accounting, Heather Rothman, stated that high U.S. inflation has, for the second consecutive year, contributed to a significant increase in inflation-adjusted amounts in the tax code.
The annual Projected U.S. Tax Rates Report from Bloomberg Tax provides a glimpse into what tax brackets and key figures will look like in 2024.
Here are the projected tax numbers for 2024:
- Single: $10,950 to $47,450
- Married Filing Jointly: $21,900 to $94,900
- Married Filing Separately: $10,950 to $47,450
- Head of Household: $16,425 to $70,800
- Trusts and Estates: $0 to $2,800
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Preparation for the Tax Landscape in 2024
Additionally, the standard deduction amounts for 2024 are projected to be $6,800 for single filers and married individuals filing separately, $13,600 for married couples filing jointly, and $10,050 for heads of households.
The child tax credit is another important consideration for families, and in 2024, the maximum amount that may be refundable is projected to be $1,700. However, it’s worth noting that discussions in Congress may lead to changes in the Child Tax Credit.
For business owners, there is a bright spot in the form of the Section 199A deduction. Sole proprietors and owners of pass-through entities can take advantage of this deduction, allowing them to deduct up to 20% of their qualified business income.
In conclusion, the recent inflationary trends have prompted an increase in inflation-adjusted figures in the tax code. Taxpayers should stay informed about these changes and consider early planning for the upcoming year, in anticipation of the official IRS announcement.
As Heather Rothman emphasized, the annual report from Bloomberg Tax & Accounting offers valuable projections for tax professionals and taxpayers alike. Stay informed and prepared for the evolving tax landscape in 2024.
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