Under federal tax law, taxpayers can reduce their tax bill by using a deduction. The Internal Revenue Service (IRS) offers two types: the standard deduction and the itemized deduction. The standard deduction is a predetermined amount of income that the IRS allows you to deduct from your taxable income to place you at a lower tax rate. According to official information from the tax agency, the standard deduction amounts for tax year 2024 are:
- $13,850 for single taxpayers or couples filing separately, under age 65
- $20,800 for heads of household
- 27,700 for couples filing jointly, under 65 years old
On the other hand, taxpayers may elect to itemize their deductions. If personal deductions exceed the amount of the standard deduction, the taxpayer gets a greater benefit, as it further decreases his taxable income, placing him in a lower tax bracket.
These are the most common deductions
Some of the payments that will help you pay less tax include charitable donations or payments to an organization. A charitable donation is a gift of money or property to a tax-exempt organization. To claim a charitable donation deduction on your taxes, you must have donated to an IRS-recognized charity and received nothing in return for your donation.
In general, you can deduct up to 60% of your adjusted gross income through charitable donations. However, you may be limited to 20%, 30% or 50%, depending on the type of contribution and the organization to which you donate.
The deduction limit applies to all donations you make during the year, regardless of how many organizations you donate to. Contributions in excess of the limit can be deducted on your tax returns for the next five years.
Gifts to family or friends are not considered tax deductible, and even if they exceed a certain amount, they may be subject to gift tax.
How much taxes do I have to pay to the IRS?
Each year, the IRS sets tax rates, i.e., the percentages of taxes paid based on a taxpayer’s taxable income. Taxable income is defined as any income that is subject to federal income tax, whether earned or unearned.
The corresponding tax rate depends on marital status. For tax year 2024, here is what tax payments are due:
- 37% for income over $578,125 ($693,750 for married couples filing jointly).
- 35% for income over $231,250 ($462,500 for married filing jointly).
- 32% for income over $182,100 ($364,200 for married couples filing a joint return).
- 24% for income over $95,375 ($190,750 for married couples filing a joint return).
- 22% for income over $44,725 ($89,450 for married couples filing jointly).
- 12% for income over $11,000 ($22,000 for married couples filing jointly).