2024 Standard Deduction Increases From 2023 Mean Larger Paychecks

[Updated with IRS Adjustments for 2024] Per the federal tax code the IRS is required to ad­just dozens of tax related items for in­fla­tion on an annual basis.

Given the persistently high levels inflation as evidenced in the recent COLA increases, the IRS has again announced significant increases to federal tax bracket ranges and standard deductions for the coming year. There was no change to the actual tax rates.

Standard Deductions by Filing Status

The standard deduction is a flat amount that allows taxpayers to reduce their taxable income (AGI), which could put them in a lower income tax bracket. Those who claim the standard deduction in their tax return cannot itemize to claim a broader range of deductions, or vice-versa.

The latest standard deduction by filing status is shown in the table below. Nearly 70% of tax payers claim the standard deduction when filing their return.

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Filing Status2024 SD2023 SD2022 SD
Married Filing Jointly / Surviving Spouses$29,200$27,700$25,900
Heads of Household$21,900$20,800$19,400
Single / Unmarried Individuals$14.600$13,850$12,950
Married Individuals Filing Separately$14.600$13,850$12,950
IRS Standard Deduction By Filing Status

Because the US tax system is a progressive one, as standard deductions and tax bracket ranges expand more of your current income is taxed in a lower bracket.

Hence the latest increase in standard deductions should be especially helpful to lower and mid­dle-in­come tax­pay­ers who often get hit by tax bracket creep when they see flat or higher incomes – which should be the case given average wages are expected to increase by a similar amount in the next 12 months.

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The above changes will act like an automatic tax cut for many W2 workers and should result in larger (take home) pay­checks, af­ter the IRS and pay­roll providers up­date pay­check-with­hold­ing cal­cu­la­tions, which will result in less money being with­held for taxes.

Naturally if you get big raise or bonus next year, your taxes may go up due to you higher overall gross/taxable income. But your current or existing wages should be taxed less.

The tax related adjustment will happen automatically for most active employees but if your life situation (marriage, divorce or kids) or employer changes you may want to submit a new or updated IRS W4 form to your HR/Payroll department.

Because of higher than average inflation any pay raise in real terms will be quickly eaten up the higher cost of goods and services, making the gain from higher tax brackets and standard deduction savings even more important to millions of Americans in the coming years.

Dependent and Additional Standard Deductions

Recent dependent standard deductions, for individuals claimed by another taxpayer are shown in the table below. The limit is also capped to $400 + the individuals earned income (up to the basic standard deduction).

Dependent with investment income only$1,300$1,250
Dependent with earned income$1,300 – $14,600$1,250 – $13,850

For aged or blind filers, an additional standard deduction of $1,550 is provided. This amount is increased to $1,950 if the individual is also unmarried and not a surviving spouse.

Standard Deduction vs Itemized Deductions

The standard deduction level is also important when claiming certain deductions. For example, you need to itemize your deductions to claim charitable donations. This assumes your total deductions exceed your standard deduction amount.

You can make this determination when filing your return, which most leading tax software can guide you through.

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