Nobody likes paying more for something, but inflation does have its perks. For instance, you get to pay off debt with inflated dollars. And if you’re retired, you get annual cost of living adjustments (COLAs) reflected in your monthly Social Security payments. In addition, the Internal Revenue Service (IRS) helps to soothe the sting by making annual inflation adjustments.

These adjustments include changes to:

• Standard deduction amounts
• Marginal rates
• Personal exemptions
• Flexible Spending Accounts (FSAs)
• Medical Savings Accounts (MSAs)
• And more

The purpose of these adjustments is to help you avoid being pushed into a higher tax bracket or experience a reduction in the value of credits and deductions due to inflation.

Recently, the IRS announced its annual inflation adjustments for more than 60 tax provisions for tax year 2024, including the tax rate schedules and other tax changes. In this post, we highlight key changes that are likely to impact most taxpayers. (For more details, please see the IRS’s Revenue Procedure 2023-34.)

The tax year 2024 adjustments described below generally apply to income tax returns filed in 2025.

Standard Deduction

The standard deduction for tax year 2024 rises to: Continue reading… Continue reading… Continue reading…