IRS sets new tax brackets, standard deduction for 2024

The IRS on Thursday announced higher inflation adjustments for the 2024 tax year, potentially giving Americans a chance to increase their take-home pay next year.

The higher limits for the federal income tax bracket and standard deductions are intended to avoid a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to high inflation.

The IRS makes such adjustments annually, but in times of inflation, the increases are more significant and impactful for taxpayers.

This year, the tax brackets are shifting higher by about 5.4%.

The higher thresholds where tax rates take effect could mean savings for millions of workers across all income brackets.