Navigating 2024 Income Tax Inflation Adjustments

Financial tips

Navigating 2024 Income Tax Inflation Adjustments

Posted by Infinite Wealth Advisors, LLC
6 months ago | December 11, 2023

As we gear up for the 2024 tax year, the Internal Revenue Service (IRS) is set to implement a slew of adjustments, unveiling modifications to over 60 tax provisions outlined in Revenue Procedure 2023-34. These changes promise to reshape the landscape for tax returns filed in 2025, introducing a series of nuanced alterations across various dimensions of the tax code.

A standout adjustment in this lineup is the standard deduction for married couples filing jointly in the 2024 tax year. Notably, this figure experiences a significant increase, climbing to $29,200—an uptick of $1,500 from the preceding tax year. Meanwhile, single taxpayers and those married but filing separately can expect their standard deduction to reach $14,600, reflecting a $750 augmentation from the 2023 baseline. Heads of households will also witness a rise in their standard deduction, reaching $21,900—an increase of $1,100 from the previous tax year.

Remaining steadfast, the top tax rate for individual single taxpayers remains at 37%, applicable to incomes exceeding $609,350 ($731,200 for married couples filing jointly). Additional tax brackets for the 2024 tax year include:

  • 35% for incomes surpassing $243,725 ($487,450 for married couples filing jointly)
  • 32% for incomes exceeding $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 beyond $47,150 ($94,300 for married couples filing jointly)
  • 12% rate for incomes surpassing $11,600 ($23,200 for married couples filing jointly)
  • 10% for single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).

Beyond these adjustments, the tax landscape in 2024 includes an Alternative Minimum Tax exemption amount of $85,700, with the phase-out commencing at $609,350. The basic exclusion amount for the estates of decedents in 2024 rises to $13,610,000—an appreciable increase from the $12,920,000 in 2023.

Moreover, the annual exclusion for gifts sees an upward adjustment to $18,000 for the calendar year 2024—an increase from the $17,000 limit in 2023. Lastly, the maximum credit for adoptions in the tax year 2024 has been refined to cover qualified adoption expenses up to $16,810, up from $15,950 in 2023. These nuanced modifications underscore the IRS’s commitment to adapting to economic conditions and meeting the diverse needs of taxpayers, highlighting the dynamic nature of the ever-evolving tax landscape.

 

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