Navigating the complexities of tax laws can be challenging, but with Scout Tax, you have a reliable partner to guide you through the changes. As we approach the 2024 tax year, several key adjustments are coming into effect that taxpayers need to be aware of. It’s crucial to stay informed about these updates to ensure your tax planning is both effective and efficient. Therefore, let’s delve into the specific changes that will impact taxpayers in the upcoming year.
Key Tax Changes for 2024
1. Standard Deduction Increase:
The standard deduction has been increased, providing taxpayers with a higher amount they can deduct from their taxable income, which helps reduce their overall tax liability. Moreover, this adjustment aims to further ease the tax burden for individuals and families.
- The standard deduction for single filers will increase to $14,600, up from $14,400 in the previous year.
- Married couples filing jointly will see their standard deduction rise to $29,200, an increase from $28,800.
- For heads of household, the standard deduction will increase to $21,600, compared to $21,200 in the previous year.
2. Marginal Tax Rates Changes:
The income thresholds for the marginal tax rates have been adjusted to reflect inflation, ensuring that taxpayers are not unfairly pushed into higher tax brackets due to rising costs. Furthermore, these changes aim to maintain a fair taxation system by aligning the tax brackets with the current economic conditions.
- The income thresholds for the marginal tax rates have been adjusted to reflect inflation. This means that as inflation affects the overall cost of living, the tax brackets will shift accordingly to prevent taxpayers from being pushed into higher tax brackets solely due to inflation.
- The 10% tax bracket now covers income up to $11,600 for single filers and $23,200 for married couples filing jointly.
- The 12% tax bracket applies to income between $11,601 and $47,800 for single filers and between $23,201 and $95,600 for married couples.
- The 22% tax bracket is for income between $47,801 and $91,900 for single filers, and $95,601 and $183,800 for married couples.
- The 24% tax bracket includes income between $91,901 and $191,700 for single filers and $183,801 and $383,400 for married couples.
- The 32% tax bracket covers income between $191,701 and $217,800 for single filers and $383,401 and $435,600 for married couples.
- The 35% tax bracket is for income between $217,801 and $539,900 for single filers and $435,601 and $647,850 for married couples.
- The 37% tax bracket applies to income over $539,900 for single filers and over $647,850 for married couples.
3. Earned Income Tax Credit (EITC):
The financial relief for low to moderate-income workers and families has been enhanced through an increase in the Earned Income Tax Credit (EITC).
- The maximum EITC for single filers with no children will be $600, an increase from $560.
- For filers with one child, the maximum EITC will be $3,995, up from $3,918.
- Filers with two children will see a maximum EITC of $6,640, an increase from $6,428.
- For filers with three or more children, the maximum EITC will be $7,430, compared to $7,221 in the previous year.
4. Retirement Account Contribution Limits:
The government has increased retirement account contribution limits, allowing individuals to save more for their future. Furthermore, these higher limits encourage greater retirement savings and enhance financial security.
- The contribution limit for 401(k) plans will increase to $20,500, up from $19,500.
- Catch-up contributions for individuals aged 50 and over will rise to $6,500, an increase from $6,000.
- The limit for IRA contributions will remain unchanged at $6,500. Additionally, for those aged 50 and over, the catch-up contribution limit will continue to be $1,000.
5. Estate and Gift Tax Exemption:
The government has increased the estate and gift tax exemption, providing more substantial tax relief for individuals transferring wealth.
- The estate and gift tax exemption will increase to $13.4 million, up from $12.9 million.
6. Health Savings Accounts (HSAs):
- The annual contribution limit for individual HSAs will increase to $3,850, up from $3,650.
- For family coverage, the limit will rise to $7,750, an increase from $7,300.
- The catch-up contribution limit for individuals aged 55 and over will remain at $1,000.
| Adjustment | 2024 Amount | 2023 Amount |
| Standard Deduction (Single Filers) | $14,600 | $14,400 |
| Standard Deduction (Married Filing Jointly) | $29,200 | $28,800 |
| Standard Deduction (Head of Household) | $21,600 | $21,200 |
| Marginal Tax Rate (10%) – Single Filers | Up to $11,600 | Up to $11,000 |
| Marginal Tax Rate (10%) – Married Filing Jointly | Up to $23,200 | Up to $22,000 |
| Marginal Tax Rate (12%) – Single Filers | $11,601 – $47,800 | $11,001 – $45,000 |
| Marginal Tax Rate (12%) – Married Filing Jointly | $23,201 – $95,600 | $22,001 – $90,000 |
| Marginal Tax Rate (22%) – Single Filers | $47,801 – $91,900 | $45,001 – $89,000 |
| Marginal Tax Rate (22%) – Married Filing Jointly | $95,601 – $183,800 | $90,001 – $180,000 |
| Marginal Tax Rate (24%) – Single Filers | $91,901 – $191,700 | $89,001 – $190,000 |
| Marginal Tax Rate (24%) – Married Filing Jointly | $183,801 – $383,400 | $180,001 – $380,000 |
| Marginal Tax Rate (32%) – Single Filers | $191,701 – $217,800 | $190,001 – $215,000 |
| Marginal Tax Rate (32%) – Married Filing Jointly | $383,401 – $435,600 | $380,001 – $430,000 |
| Marginal Tax Rate (35%) – Single Filers | $217,801 – $539,900 | $215,001 – $530,000 |
| Marginal Tax Rate (35%) – Married Filing Jointly | $435,601 – $647,850 | $430,001 – $640,000 |
| Marginal Tax Rate (37%) – Single Filers | Over $539,900 | Over $530,000 |
| Marginal Tax Rate (37%) – Married Filing Jointly | Over $647,850 | Over $640,000 |
| Earned Income Tax Credit (No Children) | $600 | $560 |
| Earned Income Tax Credit (One Child) | $3,995 | $3,918 |
| Earned Income Tax Credit (Two Children) | $6,640 | $6,428 |
| Earned Income Tax Credit (Three or More Children) | $7,430 | $7,221 |
| 401(k) Contribution Limit | $20,500 | $19,500 |
| 401(k) Catch-up Contribution Limit | $6,500 | $6,000 |
| IRA Contribution Limit | $6,500 | $6,500 |
| IRA Catch-up Contribution Limit | $1,000 | $1,000 |
| Estate and Gift Tax Exemption | $13.4 million | $12.9 million |
| HSA Contribution Limit (Individual) | $3,850 | $3,650 |
| HSA Contribution Limit (Family) | $7,750 | $7,300 |
| HSA Catch-up Contribution Limit | $1,000 | $1,000 |
Your Guide to Maximizing Benefits with Scout Tax
Staying informed about these changes is crucial for effective tax planning. By understanding and adapting to these adjustments, you can avoid potential pitfalls and take advantage of new opportunities. With the help of Scout Tax, you can ensure that you are making the most of these adjustments to optimize your tax situation for the coming year. Our expert team is here to provide you with personalized guidance tailored to your unique financial circumstances. Visit Scout Tax and Scout Industries to learn more about how you can benefit from expert tax guidance and support, ensuring a smoother and more advantageous tax filing experience.
