The federal income tax brackets for 2024 released by the IRS have been adjusted with an annual inflation rate slightly above that of the current rate. As a result, some Americans could be paying fewer taxes this year.
Partner Chris Oliva explained the disparity is due to formulas in the tax code meant to prevent inflation from raising taxes. "It’s kind of like a high tide lifts all boats," he said.
However, not all tax rates get an adjustment, Oliva noted. At income levels of $200,000 for individuals and $250,000 for married couples, there is a 3.8% tax on investments regardless of inflation. The same holds true for the $10,000 SALT break and the $3,000 limit on capital loss deductions. In addition, "interest income being higher than it has been in a long time could lead to bigger tax bills for some taxpayers," Oliva said.
Subscribers may read the full article published by the Wall Street Journal.
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