Higher Tax Brackets, Standard Deduction & IRMAA in 2024

Inflation Causes IRS to Raise Tax Brackets, Standard Deduction by 5.4%

Adjustments for key numbers for income, gift and estate taxes give taxpayers some planning opportunities

By Ashlea Ebeling, The Wall Street Journal, Nov. 9, 2023

Knowing the brackets and your marginal tax rate can help with year-end planning. A married couple with $300,000 of income, taking the standard deduction, would have a marginal tax rate of 24%. They would have more than $100,000 left in that bracket before they jump to the 32% rate. So they might consider converting part of a traditional individual retirement account into a Roth IRA if they have little or no investment income, Gillette said, securing that 24% rate for the conversion…

Not all tax rates get inflation adjustments. The 3.8% tax on investments and wages that kicks in when income reaches $200,000 for individuals and $250,000 for married couples isn’t adjusted for inflation…

The income thresholds for paying capital-gains tax at various rates are also indexed for inflation. Some taxpayers might want to sell appreciated stock when they can snag a 0% capital-gains tax rate, said Gillette. For 2024, the 0% rate applies to single filers with taxable incomes up to $47,025 and joint-filing couples with incomes up to $94,050…

The Medicare income-related monthly adjustment amount, or IRMAA, is a surcharge on Medicare premiums for Medicare Part B (medical insurance) and Part D prescription drug plans. It applies only to Medicare beneficiaries who have a modified adjusted gross income above $97,000 ($103,000 in 2024) for an individual return and $194,000 ($206,000 in 2024) for a joint return. If your earnings are below this threshold, IRMAA doesn’t apply to you.