Louisiana Tax Brackets to Change in 2024 – What’s Different?

It is December in Louisiana and that means a couple of things usually. One, we're anticipating the arrival of Santa Claus. Two, we're adjusting our budgets to pay for Christmas, and Three, we're probably not thinking about the fact that our federal tax brackets have changed.

Most of us only associate a change in tax bracket, you know the rate at which our income and assets are taxed by the Internal Revenue Service, with a huge financial windfall. Maybe you've gotten a higher paying job or you won some big money playing the lottery. Or, you had a relative pass away and you inherited some cash. Those are not uncommon reasons for tax brackets to change but they aren't the most common.

Tax brackets for folks like you and me are determined using a formula that is based on the Consumer Price Index. This Index looks at the cost of goods and services across the nation. It also features information on how inflation has affected those costs. Believe it or not, inflation plays a huge role in how much taxes we are required to pay.

This isn't new, the IRS adjusts the tax brackets every year to address what is known as "bracket creep". Bracket creep is what happens when inflation pushes taxpayers into a higher tax bracket or reduces the value of credits, deductions, and exemptions that occur without any increase in real income.

Last year, for 2023 the IRS adjusted our tax brackets by 7%. Yes, that was high and yes, that was a record for such a boost. This year inflation has resulted in a tax bracket boost of 5.4%.

Here's what that means to you in real dollars and cents. For single filers, the tax brackets have been established thusly.

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

10% - $0-$23,220

12% - $23,221 - $94,300

22% - $94,301 - $201,050

37% - $731,201 or more.

It is important to understand that the way Federal Income taxes are set up they are considered to be "marginal". In other words, you don't apply the tax bracket percentage across your entire income. Your money earned is taxed at lower rates up to certain thresholds. Then, once those thresholds have been met you move to another bracket. That's why huge financial windfalls, such as lottery wins, are often described as pushing people into a different tax bracket.

By the way, you should be getting your W-2 from your employer before the end of January 2024. The tax filing deadline for 2024 will be Monday, April 15th for your Federal Taxes and your Louisiana state taxes too.