TAX INFLATION ADJUSTMENTS1
The Internal Revenue Service announced the tax year 2024 annual inflation adjustments, including the tax rate schedules and other tax changes.
The tax year 2024 adjustments described below generally apply to tax returns filed in 2025.
The tax items for tax year 2024 of greatest interest to most taxpayers include the following dollar amounts:
- The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200 up $1,500 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, up $750, and for heads of households, the standard deduction will be $21,900 for tax year 2024, up $1,100.
- Marginal Rates: For tax year 2024, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly). The other rates are:
- 35%, for incomes over $243,725 ($487,450 for married couples filing jointly);
- 32% for incomes over $191,950 ($383,900 for married couples filing jointly);
- 24% for incomes over $100,525 ($201,050 for married couples filing jointly);
- 22% for incomes over $47,150 ($94,300 for married couples filing jointly);
- 12% for incomes over $11,600 ($23,200 for married couples filing jointly);
- The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).
- The tax year 2024 maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers who have three or more qualifying children, up from $7,430 for tax year 2023. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
- For tax year 2024, the foreign earned income exclusion is $126,500, increased from $120,000 for tax year 2023.
- Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000, increased from $12,920,000 for estates of decedents who died in 2023.
- The maximum credit allowed for adoptions for tax year 2024 is the amount of qualified adoption expenses up to $16,810, increased from $15,950 for 2023.
Read the full list of tax adjustments for 2024 on the IRS website.
RETIREMENT PLAN LIMITS2,3
Retirement plan contributions are tax deductible. By putting money aside in a tax-advantaged retirement account, you are saving for your future and also reducing your taxable income. And remember, you have until April 15, 2024, to make your 2023 IRA plan contributions!
ROTH PLANS
For Roth accounts, you can only contribute to them if you make less than a certain amount of money. This salary amount was increased for 2024. Note that your contributions may be phased out at certain income levels so it is best to speak with your financial or tax advisor about your specific situation.
We know that proper tax planning is unique to every individual, and one strategy may not work for all. Our tax preparation services can help you optimize your taxes. Our certified tax preparers can not only help guide you through tax law changes but can also make sure you aren’t missing any deductions or credits.
The Tax Team provides the following services:
- e-file
- Same-day filing services
- 1040, 1040EZ, 1040x, Schedule A, C, & D
- Federal & State tax return preparation
There’s still time to optimize your savings and taxes in 2024.
CONTACT our tax specialists today to get started tackling your taxes.
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