top of page
Search

Tax Changes in 2024


With each new year, tax laws evolve, bringing fresh opportunities and challenges for taxpayers. Here are some notable changes for 2024 to keep in mind going into the next tax season:


  1. Standard Deduction and Income Bracket Adjustments: In 2024, the IRS has adjusted tax brackets and standard deductions for inflation. The standard deduction for single filers is now $14,600, $21,900 for Head of Household, and $29,200 for married couples filing jointly. These adjustments can affect take-home pay and impact withholding needs, especially for those with significant deductions or multiple income sources.


  1. Retirement Account Contribution Limits: Contribution limits for retirement accounts such as 401(k)s and IRAs have increased again in 2024, allowing for more tax-deferred savings. Individuals can contribute $7,000 to an IRA ($8,000 if they are over 50) and can contribute $23,000 to a 401(k). HSA contributions have also increased to $4,150 for an individual and $8,300 for families. This is particularly beneficial for individuals aiming to reduce taxable income while preparing for retirement. Taxpayers have until April 15, 2025 to make these contributions.


  1. Changes to Tax Credits: Certain credits, such as the Child Tax Credit and Earned Income Tax Credit, have adjusted eligibility criteria or credit amounts, mainly based on adjusted gross income. These credits often provide substantial relief, so it’s essential to check for eligibility under the new guidelines.


  1. R&D Expensing Revisions: As the Tax Cuts and Jobs Act (TCJA) provisions continue to phase in, there have been changes in how research and development expenses are handled. Previously businesses could choose to expense R&D or capitalize it over a period of more than 60 months. Now businesses must capitalize R&D expenses for 60 months and 15 years if the expenses occur in a foreign county. Businesses involved in innovation or product development may need to adjust their budgeting and tax planning strategies accordingly.


  1. Student Loan Interest Deduction: For clients repaying student loans, there are new provisions that could increase or modify the deductible interest on these loans, reflecting recent legislative changes around education expenses.


  1. Renewable Energy Incentives: Federal and state governments have introduced additional tax breaks for renewable energy investments under the Inflation Reduction Act, including home solar installations, electric vehicle credits, and energy-efficient home improvements. These can significantly impact high-income earners looking to offset their taxes.


  1. Estate and Gift Tax Exclusions: The lifetime gift and estate tax exemption has increased to $13,160,000, which is critical for individuals engaged in estate planning. 


Comments


© 2023 ABA Tax Planning

bottom of page