The IRS released Revenue Procedure 2023-34 (PDF) and Notice 2023-75 (PDF), which detail the tax changes, inflation and cost-of-living adjustments for 2024.
The adjustment of 5.4% to the income tax brackets in 2024, while less than the significant 7% increase seen last year, indicates a partial normalization. However, it remains relatively high when compared to increases prior to 2023. Below, we’ve summarized the adjustments we feel will be of most interest to our readers. You can also download the two-page tax reference guide for a more comprehensive overview and reminder of other limits which may impact you but have not changed. The values reflected in this article are as of the November 9, 2023, and November 1, 2023, release dates. We will update this article and the reference dates if additional changes are introduced so you can be sure you have the most current information.
Highlights of Adjustments for 2024
| STANDARD DEDUCTION |
|
2023 |
2024 |
Change |
| Married Filing Jointly1 |
$27,700 |
$29,200 |
$1,500 |
| Single2 and Married Filing Separately1 |
$13,850 |
$14,600 |
$750 |
| Head of Household2 |
$20,800 |
$21,900 |
$1,100 |
1 A married filer who is blind or over age 65 can claim an additional $1,550. Two married filers who are both over age 65 or blind can claim $3,100, up $100 from 2023.
2 Single or head-of-household filers who are blind or over age 65 can claim an additional $1,950 standard deduction, up $100 from 2023.
| ESTATE & GIFT TAX |
|
2023 |
2024 |
Change |
| Annual Exclusion Gifts |
$17,000 |
$18,000 |
$1,000 |
| Estate and Gift Tax Basic Exclusion |
$12,920,000 |
$13,610,000 |
$690,000 |
| Generation Skipping Exemption |
$12,920,000 |
$13,610,000 |
$690,000 |
| OTHER ADJUSTMENTS |
|
2023 |
2024 |
Change |
| Long Term Capital Gains Rate Brackets (Married Filing Jointly) |
0% – up to $89,250 |
0% – up to $94,050 |
0% – $4,800 |
| 15% – up to $553,850 |
15% – up to $583,750 |
15% – $29,900 |
| 20% – $553,851 and above |
20% – $583,751 and above |
|
| Dependent Unearned Income Subject to Parent’s Marginal Rate (“Kiddie Tax”) |
Above $2,500 |
Above $2,600 |
$100 |
| Health/Medical Savings Account Contribution Limit |
$3,850 (self only) |
$4,150 (self only) |
$350 (self only) |
| $7,750 (family) |
$8,300 (family) |
$550 (family) |
| Cafeteria plans (Flexible Spending Account) Maximum Contributions |
$3,050 |
$3,200 |
$150 |
| Adoption Credit for Qualified Expenses (phased out based on MAGI) |
$15,950 |
$16,810 |
$860 |
| Foreign Earned Income Exclusion |
$120,000 |
$126,500 |
$6,500 |
| Qualified Business Income (Section 199A) Deduction Threshold |
$364,200 married filing jointly |
$383,900 married filing jointly |
$19,700 |
| FEDERAL INCOME TAX RATE SCHEDULES |
| MARRIED FILING JOINTLY & SURVIVING SPOUSES |
|
2024 |
2024 Tax is This Amount Plus this Percentage |
Of the Amount Over |
| 10% |
Income up to $23,200 |
$0 plus 10% |
$0 |
| 12% |
$23,201 to $94,300 |
$2,320 plus 12% |
$23,200 |
| 22% |
$94,301 to $201,050 |
$10,852 plus 22% |
$94,300 |
| 24% |
$201,051 to $383,900 |
$34,337 plus 24% |
$201,050 |
| 32% |
$383,901 to $487,450 |
$78,211 plus 32% |
$383,900 |
| 35% |
$487,451 to $731,200 |
$111,357 plus 35% |
$487,450 |
| 37% |
Income over $731,200 |
$196,669.50 plus 37% |
$731,200 |
| FEDERAL INCOME TAX RATE SCHEDULES |
| SINGLE TAXPAYERS |
|
2024 |
2024 Tax is This Amount Plus this Percentage |
Of the Amount Over |
| 10% |
Income up to $11,600 |
$0 plus 10% |
$0 |
| 12% |
$11,601 to $47,150 |
$1,160 plus 12% |
$11,600 |
| 22% |
$47,151 to $100,525 |
$5,426 plus 22% |
$47,150 |
| 24% |
$100,526 to $191,950 |
$17,168.50 plus 24% |
$100,525 |
| 32% |
$191,951 to $243,725 |
$39,110.50 plus 32% |
$191,950 |
| 35% |
$243,726 to $609,350 |
$55,678.50 plus 35% |
$243,725 |
| 37% |
Income over $609,351 |
$183,647.25 plus 37% |
$609,350 |
Contribution limits for Traditional IRAs, Roth IRAs, and IRA and Elective Deferral Plan catch-up contributions are all indexed to inflation and will increase for 2024. Adjustments were also made to the AGI Phase-outs for Roth contributions and deductible IRA contributions. The updated limits and Phase-outs are below.
| CONTRIBUTION LIMITS1 |
|
2023 |
2024 |
Change |
| Traditional and Roth IRA |
$6,500 |
$7,000 |
$500 |
| IRA Catch-up Limit2 (no change from 2022) |
$1,000 |
$1,000 |
No change |
| Elective Deferral Plans2,3 |
$22,500 |
$23,000 |
$500 |
| Elective Deferral Plan Catch-up Limit2 |
$7,500 |
$7,500 |
No change |
1 Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
2 Catch-up contributions are available for anyone over age 50
3 Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans
| AGI PHASE-OUT |
| ROTH IRA CONTRIBUTIONS |
| Single/Head of Household |
$146,000 to $161,000 |
| Married Filing Joint |
$230,000 to $240,000 |
| AGI PHASE-OUT |
| DEDUCTIBLE IRA CONTRIBUTIONS |
| Single/Head of Household |
$77,000 to $87,000 |
| Married Filing Separate* (not subject to an annual COLA adjustment) |
$0 to $10,000 |
| Married Filing Joint (active spouse) |
$123,000 to $143,000 |
| Married Filing Joint (non-active spouse) |
$230,000 to $240,000 |
There are many other cost-of-living adjustments for 2024 which may impact you. Review Revenue Procedure 2023-34 (PDF) and Notice 2023-75 (PDF) and consult your CPA to see if there are others you need to be aware of for your specific situation.
This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.
Thoughtful Intergenerational Conversations May Yield Fruit for Your Family
November 10, 2023Bragg Welcomes Grace Pharr
December 1, 2023The IRS released Revenue Procedure 2023-34 (PDF) and Notice 2023-75 (PDF), which detail the tax changes, inflation and cost-of-living adjustments for 2024.
The adjustment of 5.4% to the income tax brackets in 2024, while less than the significant 7% increase seen last year, indicates a partial normalization. However, it remains relatively high when compared to increases prior to 2023. Below, we’ve summarized the adjustments we feel will be of most interest to our readers. You can also download the two-page tax reference guide for a more comprehensive overview and reminder of other limits which may impact you but have not changed. The values reflected in this article are as of the November 9, 2023, and November 1, 2023, release dates. We will update this article and the reference dates if additional changes are introduced so you can be sure you have the most current information.
Highlights of Adjustments for 2024
1 A married filer who is blind or over age 65 can claim an additional $1,550. Two married filers who are both over age 65 or blind can claim $3,100, up $100 from 2023.
2 Single or head-of-household filers who are blind or over age 65 can claim an additional $1,950 standard deduction, up $100 from 2023.
Contribution limits for Traditional IRAs, Roth IRAs, and IRA and Elective Deferral Plan catch-up contributions are all indexed to inflation and will increase for 2024. Adjustments were also made to the AGI Phase-outs for Roth contributions and deductible IRA contributions. The updated limits and Phase-outs are below.
1 Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
2 Catch-up contributions are available for anyone over age 50
3 Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans
There are many other cost-of-living adjustments for 2024 which may impact you. Review Revenue Procedure 2023-34 (PDF) and Notice 2023-75 (PDF) and consult your CPA to see if there are others you need to be aware of for your specific situation.
This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.
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