Tax projections for 2024 | Pathfinder Retirement

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In this video discussing tax projections for 2024, the Internal Revenue Service (IRS) annually adjusts tax brackets to factor in inflation. The anticipated 5.4 percent increase for 2024 is a relief compared to the 7.1 percent spike in 2023. Bloomberg Tax & Accounting's projections indicate this adjustment, applicable to the seven federal tax brackets, with official IRS figures still pending.

The seven tax brackets, established after the 2017 Tax Cuts and Jobs Act, remain unchanged for 2024. These rates are slated to continue through the 2025 fiscal year, with potential increases without Congressional action thereafter.

Income thresholds for tax brackets are adjusted based on inflation, using the Chained Consumer Price Index. This annual adjustment prevents "bracket creep," ensuring taxpayers are not pushed into higher brackets due to inflation. For example, the 10% bracket in 2024 applies to the first $11,600 of income for individual filers, compared to $11,000 in 2023.

The standard deduction sees an increase in 2024, with additional deductions for individuals aged 65 and older or blind. Filing status considerations are crucial, with five categories: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Child. The IRS recommends selecting the status minimizing tax liability.

The video emphasizes the progressive nature of income taxes, using an example to illustrate how tax brackets apply to different income levels. The IRS provides an online tool, "What Is My Filing Status?" to help taxpayers determine their appropriate status.

The video concludes with reference charts for 2024 and 2023 tax bracket income thresholds, breaking down tax rates for various filing statuses and income levels.

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