(NEXSTAR) — If you haven’t gotten a paycheck yet this year, you may be in for a pleasant surprise on Friday — it may be slightly larger than your paychecks in 2023, even if you didn’t get a raise.
It’s all thanks to changes made by the federal government (unless you did actually get a raise of more than roughly 5.4% to start the year, then it’s partially due to that, too).
In November, the IRS announced inflation adjustments to the tax code, including changes to the standard deduction and individual income brackets. The standard deduction is a dollar amount that reduces the amount of income that is taxable.
Those took effect as we rang in 2024 and will apply to tax returns we file in 2025.
Part of the reason we’re seeing these inflation adjustments is to combat “bracket creep,” which happens when inflation pushes taxpayer incomes into higher tax brackets without actually giving workers additional purchasing power.
This year, the standard deduction will go up to $29,200 for married couples filing jointly, an increase of $1,500. For single taxpayers and married individuals filing separately, the standard deduction will rise $750 to $14,600. For heads of households, the standard deduction will jump up $1,100 for tax year 2024 to $21,900.
While the changes are beneficial, they aren’t as large as the increases we saw in 2023.
So what does this all mean for your paycheck?
Depending on your withholdings, and if you’re set to make roughly what you made last year, you could see a small increase in your paychecks in 2024. You can see more specifically where the increase is coming from by comparing the federal withholdings on your first paycheck of 2024 to the last paycheck you received in 2023.
Although you’re technically taking home more money each week (or every other week, depending on your employer’s pay schedule), the funds are intended to help offset the inflation we’re still seeing.
The latest report from the Labor Department, released Thursday, shows U.S. inflation rose again in December, increasing by 0.3% from November and 3.4% from 12 months earlier. More than half the increase in prices from November to December reflected higher housing costs. Energy costs, along with food prices, also contributed to inflation.
Inflation has cooled more or less steadily since hitting 9.1% in mid-2022. Still, despite the slowdown in price increases, along with steady economic growth, low unemployment and healthy hiring, polls show many Americans are dissatisfied with the economy.
That disconnect, a likely issue in the 2024 elections, has puzzled economists and political analysts. A major factor is the lingering financial and psychological effects of the worst bout of inflation in four decades. Much of the public remains exasperated by higher prices. Prices are still 17% higher than they were before the inflation surge began and are still rising.
The Associated Press contributed to this report.
Source: Fox 8 News Channel