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TaxBuzz Top 5 - IRS Shifts Tax Brackets, Indiana Moves Toward No State Income Tax, & More

by
Rebekah Barton
on
12/29/2023
TaxBuzz Top 5 - IRS Shifts Tax Brackets, Indiana Moves Toward No State Income Tax, & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. New IRS Tax Brackets Take Effect Next Month

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Credit: Zach Gibson/Stringer/Getty Images

In January 2024, IRS tax brackets will increase by 5.4%, meaning you could see larger paychecks next year depending on how much you earn.

Fox Business notes:

“ The increase is intended to avoid a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.  ”

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With inflation a major issue over the past couple of years, it is not surprising that the IRS is shifting brackets this year. The new U.S. tax brackets are as follows:

Tax brackets for single filers:

  • 10%: Taxable income up to $11,600
  • 12%: Taxable income over $11,600
  • 22%: Taxable income over $47,150
  • 24%: Taxable income over $100,525
  • 32%: Taxable income over $191,950
  • 35%: Taxable income over $243,725
  • 37%: Taxable income over $609,350

Tax brackets for joint filers:

  • 10%: Taxable income up to $23,200
  • 12%: Taxable income over $23,200
  • 22%: Taxable income over $94,300
  • 24%: Taxable income over $201,050
  • 32%: Taxable income over $383,900
  • 35%: Taxable income over $487,450
  • 37%: Taxable income over $731,200

2. Backlash After Pennsylvania City Approves 17% Property Tax Hike

Residents of Ridley Park, Pennsylvania are frustrated after officials voted to approve at 17% tax hike this week. The situation has made national headlines, with CBS News sharing that Ridley Park's Borough Hall was packed with local taxpayers during Thursday night's meeting, amid claims that nearby Taylor Hospital has refused to pay approximately $487,000 in property taxes.

Now, Delaware County families are on the hook for the hospital's failure to pay. 

CBS spoke to concerned members of the community, one of whom said, "It's unfair and just plain wrong to burden the taxpayers of Ridley Park with this historic tax rate." Another local, Mary Pat King, told reporters the situation is challenging, "Not just for seniors on a fixed income but families struggling to get by — nobody has that kind of disposable income. This is a small town with 7,000 residents."

Philadlephia's ABC affiliate, Action News 6, shared a statement from Taylor Hospital's parent company, Crozer Health. 

"Crozer Health has been in active negotiations with taxing authorities to determine the fair market value of the property which the property taxes should be based upon. We are optimistic that we will be able to reach a mutually agreed-upon resolution," a spokesperson said.

3. Indiana Moves Closer to Nixing State Income Tax

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Credit: Pawel Gaul/Getty Images

On January 1, 2024, the state income tax in Indiana will be reduced from 3.15% to 3.05%. According to NWI, this change comes as the result of 2023 legislation aimed at making the Hoosier State's income tax rate the -- or close to the -- lowest among states that levy income tax.

Someone making $50,000 a year will pay $1,525 in state income tax next year, rather than the current $1,575. Although the tax savings may not seem like much for lower-income earners, it will have an impact. Those who earn more will save more, as well. An employee earning $300,000 a year, for example, will save $300 on their state income taxes next year. 

This is not the first time Indiana legislators have cut the state income tax in recent years. It sat at 3.4% in 2015, and many state lawmakers want to nix income tax altogether. 

While government officials have not confirmed that Indiana will do away with income tax, consistent tax cuts are moving the state in that direction.

4. Florida's Back-to-School Tax Holiday Begins January 1

Florida's back-to-school tax holiday is set to run January 1 - January 14, 2024. This period of time is designed to help families purchase school supplies and other necessities following students' winter break. 

WFTS Tampa Bay shared details about the upcoming tax-free weeks, including details of which items qualify and which do not:

“ During the holiday period, eligible items include:Clothing, footwear, and certain accessories with a sales price of $100 or less per itemCertain school supplies with a sales price of $50 or less per itemLearning aids and jigsaw puzzles with a sales price of $30 or lessPersonal computers and certain computer-related accessories with a sales price of $1,500 or less, when purchased for noncommercial home or personal useThe holiday does not apply to the following:Any item of clothing with a sales price of more than $100Any school supply item with a sales price of more than $50Books that are not otherwise exemptComputers and computer-related accessories with a sales price of more than $1,500Computers and computer-related accessories purchased for commercial purposesRentals of any eligible itemsRepairs or alterations of any eligible itemsSales of any eligible items within a theme park, entertainment complex, public lodging establishment, or airport ”

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Full details about eligibility can be found here.

5. Biden Engages In Conversations About Palestinian Tax Revenue Issue

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Credit: Jacquelyn Martin-Pool/Getty Images

President Biden and Israeli Prime Minister Netanyahu engaged in a reportedly tense conversation over Israel withholding tax revenue for the Palestinian Authority, marking heightened tensions. Israel, under Finance Minister Smotrich's decision, suspended full fund transfers, citing concerns over funds reaching Hamas.

The PA refused partial transfers, raising fears of economic collapse. Per Axios, the Biden administration urged Israel to release the withheld funds, expressing concerns about security forces' salaries and potential West Bank escalation. During the aforementioned recent call, Biden proposed transferring funds to Norway for safekeeping, a plan initially raised by Netanyahu. However, Netanyahu backtracked, citing distrust in Norway, leading to a tense exchange.

The Biden administration sees this as a test for Netanyahu to take political risks. Despite Israeli optimism, the tax issue remains unresolved.

Which of this week's headlines is most interesting to you?

Feature Image Credit: Pawel Gaul/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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