It’s a brand new year, and with it comes important changes to your federal income tax return for 2024. These changes may seem insignificant, but they can impact your take-home pay and income tax return.
We know that taxes can be complicated and stressful, which is why we’ve listed some of the most important tax changes for 2024 and what they mean for you below. Remember to reach out to your financial planner or CPA if you have further questions about these tax changes.
New Tax Brackets for 2024
The IRS typically makes tax code changes each year to account for inflation. These changes also help prevent “tax bracket creep,” which can push you into a higher tax bracket even if the value of money is essentially the same.
Here’s a complete list of 2024 tax brackets provided by the IRS.
Standard Tax Deduction Changes
The standard tax deduction for single filers has been increased to $14,600. That’s $750 higher from 2023. For those married, filing jointly, the standard tax deduction has been increased to $29,200. This is a $1,500 increase from 2023.
Claiming the standard tax deduction will help boost your tax refund and reduce your taxable income. Keep this change in mind when preparing to file your tax return.
Retirement Contribution Limits
You can now contribute more to your 201(k) plan in 2024. The new contribution limit is $23,000, a $500 increase from 2023. If you have an Individual Retirement Account, the limit has also been raised by $500 for the new year. Its contribution limit is now $7,000.
Tax Credit Changes
Here are a few other changes you should know about:
- If you have three or more qualifying children claimed as dependents on your return, you are now eligible to receive $7,830 via the Earned Income Tax Credit. That’s $400 more than the previous $7,430 for 2023.
- Maximum individual contributions for health savings accounts (HSAs) have been increased to $3,200 from $3,050 in 2023 and the maximum family contributions $8,300.
- The annual exclusion for gifts is now $18,000, an increase from $17,000 for 2023.
Inflation adjustments add up
Tax changes for 2024 include adjustments to tax brackets, the standard tax deduction, retirement contribution limits, and tax credits. While they may seem small, they do add up and can impact your refund. It’s important to be aware of these changes and how they affect your finances.
If you’re not sure how the tax changes for 2024 will affect your tax return, retirement planning, or overall finances, let the Guiding Wealth team help. We’ll help you understand these tax changes and how they affect your finances. And we’ll take the lead in updating your current plans and contributions if needed.
Schedule a consultation with us online today or call us at 214-810-3835 to get started.