The IRS is introducing new income limits for its seven tax brackets, adjusting the thresholds to account for the impact of inflation. That could provide a break to some taxpayers on their taxes in 2024.

The tax agency on Thursday said it's adjusting the tax brackets upwards by 5.4%, relying on a formula based on the consumer price index, which tracks the costs of a basket of goods and services typically bought by consumers. The 2024 limits come after the IRS last year expanded its tax brackets by a historically large 7%, reflecting last year's high inflation.

The IRS adjusts tax brackets annually — as well as many other provisions, such as retirement fund contribution limits — to counter the impact of inflation. That can help avoid so-called "bracket creep," or when workers are pushed into higher tax brackets due to cost-of-living adjustments or raises even though their standard of living may have remained the same.

Workers can also get a break if more of their taxable income falls into a lower bracket as a result of the higher thresholds. Taxpayers will file their 2024 taxes in early 2025.

Tax brackets

The IRS increased its tax brackets by about 5.4% for each type of tax filer for 2024, such as those filing separately or as married couples.

There are seven federal income tax rates, which were set by the 2017 Tax Cuts and Job Act: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

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