The Internal Revenue Service just released income tax brackets, standard deductions, retirement contribution limits and more for the 2024 tax year. These are important to know as you plan for 2024. It will help you decide how much to increase your retirement contributions, what your income tax might be based on 2023 numbers and so many other planning opportunities.
Overall, more than 60 provisions have changed. Here are a few of the most critical items you will want to know. Reach out for our full guide.
Tax Bracket Inflation Adjustment
Tax brackets have been adjusted by 5.4% for 2024. The primary driver of this adjustment is to account for inflation. The government’s goal is to keep income taxes in sync with consumer buying power.
The standard deduction has increased to $29,200 for married couples filing jointly, up $1,500 from the previous year. For single filers, this number increased by $750 to $14,600.
Individual Retirement Accounts (IRAs)
IRA contribution limits have increased by $500 in 2024 to $7,000. Catch-up contributions for those over age 50 remains at $1,000, bringing the total limit to $8,000 if you are in that age range.
The income phase-out range for Roth IRA contributions increased by $8,000 to $146,000-$161,000 for single filers and heads of household. For married couples filing jointly, phase-out will be $230,000 to $240,000 (a $12,000 increase).
Workplace Retirement Accounts
If your work provides you with 401(k), 403(b), 457 plans, and similar accounts will see a $500 increase for 2024, bringing the total maximum contribution amounts to $23,000. The catch-up contribution for those aged 50 and older remains at $7,500, bringing their total limit to $30,500.
The annual gift tax exclusion is now $18,000 for 2024, an increase of $1,000 from the previous year.
These numbers are provided to you based on current information released by the IRS and could be subject to change. Be sure to set up time to speak with your financial advisor and CPA to learn more about how these changes will impact you.
Disclaimer: The information provided herein is not tax, legal or financial advice. It is for informational purposes only.