Tax Filing Starts Monday: 5 Key Updates You Need to Know & Tips for a Faster Refund

Taxpayers in the United States can begin filing their taxes starting January 27, 2025, with a deadline set for April 15, 2025. The IRS expects more than 140 million tax returns to be filed during this period. Additionally, the IRS has expanded the availability of its Direct File program, which will now be accessible to taxpayers in 25 states beginning January 27.

Faster Refunds: Key Considerations

The IRS anticipates issuing most refunds within 21 days. To receive refunds quickly, taxpayers should:

  1. File electronically to ensure faster processing.
  2. Opt for direct deposit instead of paper checks, as mailed refunds take longer.

Paper-filed returns and those requesting a check refund via mail generally take the longest to process. The IRS also warns that some refunds may require additional review, particularly if errors or fraudulent activity are detected.

New Tax Brackets for 2024

The IRS has adjusted tax brackets for 2024 based on inflation, which will apply to income earned in 2024 and reported in 2025 tax filings. Lower-income earners will pay a lower tax rate, while higher-income earners will be subject to higher rates. These tax brackets are updated annually.

Here are the new federal tax brackets for 2024:

Tax Rate Single Filers Married Filing Jointly
10% Up to $11,600 Up to $23,200
12% $11,601 – $47,150 $23,201 – $94,300
22% $47,151 – $105,525 $94,301 – $201,149
24% $105,526 – $191,950 $201,150 – $383,899
32% $191,951 – $243,725 $383,900 – $487,449
35% $243,726 – $609,349 $487,450 – $731,199
37% Over $609,349 Over $731,199

If your income falls within multiple brackets, only the amount exceeding a threshold is taxed at the higher rate. For example, a single filer earning $50,000 would pay 10% on the first $11,600, 12% on income between $11,601 and $47,150, and 22% on the remaining amount over $47,150.

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Dollar Photo by 金 运

Higher Standard Deductions in 2024

Many taxpayers reduce their taxable income by taking the standard deduction rather than itemizing. The IRS has increased the standard deduction for 2024, reducing the amount of income subject to tax:

  • Single filers: $14,600
  • Married couples filing jointly: $29,200
  • Heads of household: $21,900

Earned Income Tax Credit (EITC) Increases

The Earned Income Tax Credit (EITC), which benefits low-to-moderate-income workers, has been adjusted for inflation in 2024. Families with three or more children can receive a maximum credit of $7,830, up from $7,430 in 2023. Single filers earning $18,591 or less may qualify for a credit of up to $630.

Foreign Earned Income Exclusion

For taxpayers working abroad, the Foreign Earned Income Exclusion has increased. In 2024, Americans working overseas can exclude up to $126,500 in earnings from U.S. taxes, up from $120,000 in 2023. To qualify, an individual must spend at least 330 days outside the U.S. within a 12-month period.

Gift Tax Exemption Increase

The annual gift tax exemption has also risen from $17,000 to $18,000 per recipient in 2024, allowing individuals to gift more without incurring federal gift taxes.