Submitted by Gabrielle Peitsch, a Rule 19-220 student attorney in the Low Income Taxpayer Clinic
On Thursday, November 19, 2023, the IRS revealed inflation adjustments to over 60 tax provisions set to take effect in tax year 2024. (Note: These provisions apply to 2024 tax returns filed in April 2025). Among these, the most significant change pertains to the federal income tax brackets.
Federal income tax brackets outline various income ranges and assign specific rates to each range. Since tax on income is progressive, the more income the taxpayer earns, the greater the tax they will pay. For example, a taxpayer with taxable income of $200,000 is paying more income tax than a taxpayer with taxable income of $40,000. See below the changes in tax brackets for tax years 2023 and 2024 for Single and Married Filing Jointly.
Single Filers:
| Tax Rate | 2023 tax year | 2024 tax year |
| 10% | Less than $11,000 | Less than $11,600 |
| 12% | $11,001 – $44,725 | $11,601 – $47,150 |
| 22% | $44,726 – $95,375 | $47,151 – $100,525 |
| 24% | $95,376 – $182,100 | $100,526 – $191,950 |
| 32% | $182,101 – $231,250 | $191,951 – $243,725 |
| 35% | $231,251 – $578,125 | $243,726 – $609,350 |
| 37% | More than $578,125 | More than $609,350 |
Married Filing Jointly:
| Tax Rate | 2023 tax year | 2024 tax year |
| 10% | Less than $22,000 | Less than $23,200 |
| 12% | $22,001 – $89,450 | $23,201 – $94,300 |
| 22% | $89,451 – $190,750 | $94,301 – $201,050 |
| 24% | $190,751 – $364,200 | $201,051 – $383,900 |
| 32% | $364,201 – $462,500 | $383,901 – $487,450 |
| 35% | $462,501 – $693,750 | $487,451 – $731,200 |
| 37% | More than $693,750 | More than $731,200 |
This tax is also applied marginally, thus your income tax is not simply your tax rate multiplied by your taxable income. Taxpayers instead must pay income tax at each level up until the tax rate aligned with their tax bracket. For example, a single taxpayer with $100,000 of taxable income falls under 24% tax rate for 2023. This does not mean their tax is $100,000 x 24%. Rather their tax in tax year 2023 applies as follows:
10% x ($11,000 – $0) = $1,100
12% x ($44,725 – $11,000) = $4,047
22% x (95,300 – $44,725) = $11,126
So, the total tax for a single taxpayer with $100,000 of taxable income in tax year 2023 would be:
$1,100 + $4,047 + $11,126 = $16,273
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To illustrate the effect of the increased income tax brackets, the calculation for tax year 2024 is as follows:
10% x ($11,600 – $0) = $1,160
12% x ($47,150 – $11,600) = $4,266
22% x (100,525 – $47,150) = $11,742
So, the total tax for a single taxpayer with $100,000 of taxable income in tax year 2024 would be:
$1,160 + $4,266 + $11,742 = $17,168
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The increase in the federal income tax brackets have a significant impact on taxpayers starting in tax year 2024. For a single taxpayer with $100,000 in taxable income, their federal tax due would increase $895 from tax year 2023 to 2024. While this increase is a reaction to inflation, taxpayers’ incomes are not keeping pace with the inflationary trend. In 2022, WTW, a consultancy firm specializing in employment relations, conducted a survey of 1,004 U.S. companies. They found salaries increased an average of 3.4% in 2022, while the inflation rate sat around 7.9%.[1] To apply an increase in tax that directly applies to income, taxpayers are left in a worse position. Additionally, all taxpayers will be negatively affected, as the updated brackets apply to all – from low-income families to high-earning individuals.
[1] https://www.forbes.com/sites/johnbremen/2023/05/17/why-salary-increases-still-do-not-align-with-inflation/?sh=443a590b5d0d
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