Tax season is quickly approaching, The US Internal Revenue Service (IRS) is expected to begin processing tax returns in late January.

Each year, the IRS adjusts tax brackets based on income for inflation. So when incomes rise or fall, tax brackets also rise. which determine the percentage of labor income sent to the federal government.

The US uses a “progressive‘Taxation system in which those who earn more are taxed more heavily than those who earn less when it comes to taxes on income earned through employment. In contrast, regressive systems are more similar to sales taxes, where all income recipients pay the same tax rate.

The tax rates for income from 2024 are around five percent higher than in the previous year. By raising tax brackets, employees can prevent themselves from moving into a higher tax bracket if their wages increase slightly.

What the tax system often misunderstands is that an employee’s income is not subject to a single tax rate. Let’s look at an example: Consider the case of Penny, who will have an annual pre-tax income of $86,580 in 2024. This number is based on average weekly earnings for the third quarter of this year, as reported by the Bureau of Labor Statistics.

Calculating your tax bill

If the IRS taxed Penny’s total income at 22 percent, the rate at which income between $47,150 and $100,525 will be taxed in 2024, she would pay the federal government $19,047.

However, this is not the way the calculation is done.

For the 2024 tax filing season The first $11,600 earned is taxed at 10 percent, for a total of $1,600. Then, The amount between $11,600 and $47,150 is subject to a 12 percent taxwhich equals $4,266. And finally, because Penny’s income does not exceed $100,525, A tax of 24 percent is imposed on the employee’s remaining income ($39,430).for a total of $8,674, brought her Total tax bill at $14,540. This figure does not take into account any taxes paid to Social Security or the state government.

What will the standard deduction be for the 2024 tax season?

Just like the tax brackets, the flat rate deduction also changes from year to year. For the 2024 tax season, the IRS is offering a standard deduction of:

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