Hey ,
As you know, tax planning is crucial to running a successful business and managing your personal finances. But tax planning is not a one-time thing. It’s an ongoing process that requires you to stay updated with the latest changes and developments in the tax landscape.
That’s why I want to share with you some important information that the IRS announced for tax year 2024.
These are the annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. These adjustments will affect your income, deductions, credits, and more.
You can find detailed information about these annual adjustments in Revenue Procedure 2023-34, but here are some of the highlights of the changes for tax year 2024:
- The standard deduction for married
couples filing jointly rises by $1,500, to $29,200. For single taxpayers and married individuals filing separately, the standard deduction increases to $14,600 for 2024; for heads of households, the standard deduction will be $21,900.
- The top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly). The other rates are 35%, 32%, 24%, 22%, 12%, and 10%, depending on your income level and filing status.
- The Alternative Minimum Tax exemption amount for tax year 2024 is $85,700 and begins to phase out at $609,350 ($133,300 for married couples filing jointly for whom the exemption begins to phase out at $1,218,700).
- The maximum Earned
Income Tax Credit amount for tax year 2024 is $7,830 for qualifying taxpayers with three or more qualifying children, an increase of $7,430 for tax year 2023.
- The
dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $640, an increase of $30 from taxable years beginning in 2023.
- The annual exclusion for gifts increases to $18,000 for calendar year 2024, increased from $17,000 for calendar year 2023.
- The maximum credit allowed for adoptions for tax year 2024 is the amount of qualified adoption expenses up to $16,810, increased from $15,950 for 2023.
These are just some of the changes that will affect your tax planning for 2024. There are many more changes that you need to be aware of and take advantage of. That’s why I recommend you consult with a professional accountant or tax professional like me to help you plan your taxes accordingly.
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