IRS Announces 2024 Tax Provisions Update
The IRS released details on Thursday regarding the annual inflation adjustments for over 60 tax provisions applicable to tax year 2024. These changes, including increases in the standard deduction for both married couples and single individuals, are expected to impact tax returns filed in 2025. The specifics of these adjustments are outlined in Rev. Proc. 2023-24.
Standard Deduction Adjustments
For tax year 2024, the standard deduction for married couples filing jointly rises to $29,200, reflecting a $1,500 increase from the previous year. Single taxpayers and married individuals filing separately will see their standard deduction increase to $14,600, up by $750. Heads of household will have a standard deduction of $21,900 for 2024, representing a $1,100 rise from the amount in tax year 2023.
Income Rate Brackets
The top tax rate for individual single taxpayers with incomes exceeding $609,350 remains at 37% for tax year 2024. Other brackets include:
– 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
– 32% for incomes over $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 over $47,150 ($94,300 for married couples filing jointly)
– 12% for incomes over $11,600 ($23,200 for married couples filing jointly)
– 10% for incomes of single individuals with $11,600 or less ($23,200 for married couples filing jointly)
Other Adjustments for Tax Year 2024
– Alternative Minimum Tax Exemption: $85,700, phasing out at $609,350 ($133,300 for married couples filing jointly)
– Maximum Earned Income Tax Credit: $7,830 for three or more qualifying children
– Monthly Limitation for Qualified Transportation Fringe Benefit and Qualified Parking: $315
– Employee Salary Reductions for Health Flexible Spending Arrangements: $3,200
– Maximum Carryover Amount for Cafeteria Plans: $640
– Medical Savings Account (self-only coverage): Annual deductible $2,800 to $4,150, maximum out-of-pocket expense $5,550
– Medical Savings Account (family coverage): Annual deductible $5,550 to $8,350, maximum out-of-pocket expense $10,200
– Foreign Earned Income Exclusion: $126,500
– Basic Exclusion Amount for Estates of Decedents: $13,610,000
– Annual Exclusion for Gifts: $18,000
– Maximum Adoption Credit: Up to $16,810
New in 2024
Commencing in calendar year 2023, the Inflation Reduction Act reinstates the Hazardous Substance Superfund financing rate for crude oil and petroleum products entering the United States. For calendar year 2024, crude oil or petroleum products entered after Dec. 31, 2016, will be subject to a tax rate of 26 cents per barrel.