The Internal Revenue Service (IRS) has announced adjustments to the tax brackets for the 2024-2025 tax season, aiming to address the issue of bracket creep caused by inflation. These adjustments could lead to larger refunds for taxpayers across the United States.

The IRS’s annual inflation adjustments report reveals a 5.4% increase in income thresholds for various tax brackets. This move comes as a response to inflationary pressures, ensuring that taxpayers are not pushed into higher tax brackets solely due to inflation, a phenomenon known as bracket creep.

For single filers, the 10% tax rate will apply to taxable incomes up to $11,600, while the top bracket of 37% will be applicable to individuals earning above $609,350. Joint filers will benefit from the lowest rate of 10% for taxable incomes up to $23,200, with the highest bracket of 37% applying to couples earning $731,200 or more.

It’s important to note that these adjustments are based on the federal income tax rates established by the 2017 Tax Cuts and Jobs Act, which include seven tax brackets ranging from 10% to 37%. These rates operate on a progressive scale, meaning higher incomes are subject to higher tax rates.

By adjusting the tax brackets to account for inflation, the IRS aims to ensure that taxpayers are not unfairly penalized by being pushed into higher tax brackets without actual increases in income. This move could potentially lead to larger refunds for taxpayers, providing relief in the face of rising living costs.

Taxpayers are encouraged to stay informed about these adjustments and consult with tax professionals to understand how they may impact their individual tax situations. As the 2024 tax season approaches, these changes underscore the IRS’s commitment to maintaining fairness and accuracy in the tax system.