This IRS Change Puts More Money in Michigander’s Pocket

The IRS has made a change for the second year in a row that will affect your taxes, but thankfully it is a positive change that may give you more money.

High Inflation This Year

Inflation has affected nearly every aspect of American's lives this year, raising the prices of groceries, and gasoline, and not even McDonald's hashbrowns have escaped inflation. However, the IRS has taken notice, and just like last year, they are adjusting the standard deduction to account for inflation, meaning less of your income will be taxable.

What Is Standard Deduction?

According to thestreet.com, a leading digital financial media company, Standard Deduction is,

 A dollar amount that reduces your taxable income.

The amount you get is dependent on the number of dependents in your home, your age, or if a person has any disabilities.

For 2024, the standard deduction was increased by 5% from last year, which had increased by a record amount. Here is a comparison of the deductions from last year in comparison to the new rate.

• Single: $14,600 (up $750 from 2023)
• Married couples filing jointly $29,200 (up $1500 from 2023)
• Married couples filing separately $14,600 (up $750 from 2023)
• Heads of Households $21,900 (up $1,100 from 2023)

What does this mean for you?

While the increases above are not drastic, even a little bit goes a long way. The Street provides this example:

If you earn $50,000 and your filing status is single, the standard deduction that can be applied is $14,600, which means you'll only need to pay taxes on $36,900 of your $50,000. It keeps a little bit of your hard-earned money from being taxed.