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
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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.
Wendy