2024 will come with a boost for income thresholds related to tax brackets, the Internal Revenue Service announced earlier this year.

Tax brackets are determined using a formula based on the Consumer Price Index, or CPI, which looks at the cost of goods and services and inflationary increases. Continued high inflation in 2023 translated to an increase in tax brackets for 2024 of 5.4%.

The yearly adjustments are designed to address “bracket creep” or what happens when inflation pushes taxpayers into higher income tax brackets or reduces the value of credits, deductions and exemptions without an increase in real income.

Last year’s boost was a record 7%.

Like 2023, the federal income tax has seven rates in 2024: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.

These brackets will apply for 2024 for taxes paid in 2025.

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The 2024 tax brackets are:

Single filers

10% – $0-$11,600

12% – $11,601 – $47,150

22% – $47,151 – $100,525

24% – $100,526 – $191,950

32% – $191,951 – $243,725

35% – $243,726 – $609,350

37% – $609,351 or more

For married individuals filing joint returns

10% – $0-$23,220

12% – $23,221 – $94,300

22% – $94,301 – $201,050

24% – $201,051 – $383,900

32% – $383,901 – $487,450

35% – $487,451 – $731,200

37% – $731,201 or more

For heads of households

10% – $0 – $16,550

12% – $16,551 – $63,100

22% – $63,101 – $100,500

24% – $100,501 – $191,950

32% – $191,951 – $243,700

35% – $243,701 – $609,350

37% – $609,351 or more

How tax brackets work

Federal income taxes are “marginal,” which means you don’t apply the tax bracket percentage on your entire income. Instead, your income is taxed at the lower rate up to a certain income threshold and then, if you have income over and above what would put you in the first bracket, you go to the second marginal tax bracket rate, and so on, according to Smart Asset.