The IRS recently released updated income tax brackets for 2024. While some of the parameters remain unchanged from the 2020 tax year, others have shifted or been added. For individuals with higher income levels, taxes are slated to go up in the near future.
Regarding the income levels, the three highest tax brackets remain 15%, 25%, and 35%. The 33% bracket has been removed and replaced with a 35% bracket for individuals making $400,000 or more in taxable income. Then there are two more brackets — 37% and 39.6% — for taxpayers who earn $1 million or more.
In addition to these changes, the IRS is introducing the “Long-Term Capital Gains” tax. This tax applies to any income from the sale of long-term investments that have been held for more than a year. For incomes between $78,000 and $496,000, this tax rate is 20% instead of 15%. For income over $496,000, this tax rate is 23.8%.
The IRS is also implementing a Qualified Business Income (QBI) tax for those earning more than $415,000 in taxable income from their businesses. This rate is 39.6% and, for those under the $415,000 threshold, the QBI rate is 15%.
Overall, the updated tax brackets for 2024 will have a significant effect on many individuals and businesses. Those with higher income levels will be subject to higher taxes, but those with lower income levels may see a slight decrease. For those looking to maximize their financial benefits under the new tax brackets, it’s important to consult a tax advisor to get a better understanding of how the new laws will affect them and their budget.
The IRS recently released updated income tax brackets for 2024. While some of the parameters remain unchanged from the 2020 tax year, others have shifted or been added. For individuals with higher income levels, taxes are slated to go up in the near future.
Regarding the income levels, the three highest tax brackets remain 15%, 25%, and 35%. The 33% bracket has been removed and replaced with a 35% bracket for individuals making $400,000 or more in taxable income. Then there are two more brackets — 37% and 39.6% — for taxpayers who earn $1 million or more.
In addition to these changes, the IRS is introducing the “Long-Term Capital Gains” tax. This tax applies to any income from the sale of long-term investments that have been held for more than a year. For incomes between $78,000 and $496,000, this tax rate is 20% instead of 15%. For income over $496,000, this tax rate is 23.8%.
The IRS is also implementing a Qualified Business Income (QBI) tax for those earning more than $415,000 in taxable income from their businesses. This rate is 39.6% and, for those under the $415,000 threshold, the QBI rate is 15%.
Overall, the updated tax brackets for 2024 will have a significant effect on many individuals and businesses. Those with higher income levels will be subject to higher taxes, but those with lower income levels may see a slight decrease. For those looking to maximize their financial benefits under the new tax brackets, it’s important to consult a tax advisor to get a better understanding of how the new laws will affect them and their budget.
