Changes to the tax code were recently announced by the IRS to prevent bracket creep from happening.
Due to improvements in the economic conditions, changes to prevent bracket creep are less drastic this time. (Photo: FB Wealth Management)
Prevention Of Bracket Creep
The IRS, to prevent bracket creep, has made changes to its tax code for next year, which will affect tax filings in 2025. These changes aim to prevent “bracket creep,” where inflation pushes people into higher tax brackets.
The adjustments to prevent bracket creep include an increase in the standard deduction and changes to transportation benefits and foreign income exclusions. In line with bracket creep prevention, your tax bracket determines the rate of tax you pay, and the numbers on brackets have risen for 2024.
According to a published article by The U.S. Sun, the changes to prevent bracket creep are less drastic than last year due to improved economic conditions.
The IRS has announced that the 2023 filing season will begin on January 29, 2024, and there are other tax code changes taking effect soon to prevent bracket creep, including a rebate for electric vehicle purchases.
Due To Inflation
In a published article by CNET, the IRS has made changes to the tax code for 2024 in response to high inflation and to prevent bracket creep. The changes include an increase in federal income tax brackets.
These changes are made to prevent bracket creep and aim to prevent individuals from being pushed into a higher tax bracket. If your income remains the same, you may bring home a slightly larger paycheck due to the lower taxes withheld.
However, it’s important to note that inflation may still affect your overall expenses.
