10 Tax Changes in 2024 You Should Know About
As we step into the New Year, the IRS has been diligently addressing the upcoming changes in the tax landscape for 2024. The year ahead promises modifications that can significantly impact a majority of taxpayers. Here are 10 Key changes that may help you save when filing your taxes next year:
1) IRS unveils exciting rise in tax brackets for the New Year. The IRS has announced an exciting adjustment to tax brackets for the New Year, with a 5.4% increase in income thresholds for moving into higher tax brackets. This change is determined by the Consumer Price Index (CPI), which tracks the prices of goods and services. The CPI provides a clear insight into inflation trends: when inflation is high, tax brackets receive a more significant increase; conversely, if inflation is low, the rise in tax brackets is more modest.
2) Standard deductions will increase in 2024. Standard deductions will increase in 2024. A popular tax filing choice for 86% of Americans, this option is set to rise. Instead of going through the hassle of itemizing deductions, many people opt for filing with the standard deduction. The good news is that the allowable amount for deductions will be higher in the upcoming tax year..
3) Higher exemptions bring tax relief for high-income individuals. Wealthy taxpayers, subject to the Alternative Minimum Tax (AMT), handle deductions and income sources differently. In 2023, the AMT exemption began at $81,300 and decreased for incomes above $578,150. However, in 2024, it increases to $85,700 and starts decreasing for incomes above $609,350. For married couples who file jointly, the AMT exemption will be $133,300, decreasing for incomes above $1,218,700.
4) EITC rises, putting more money in the pockets of eligible parents. Those with three or more qualifying children will see the “Earned Income Tax Benefit (EITC) increase from $7,430 to $7,830, benefiting low- to moderate-income taxpayers with children.
5. Monthly limit for tax-free transportation perks gets a $15 increase. The monthly limit for qualified benefits towards commuter and qualified parking will increase from $300 to $315.
6. Change in allowable FSA contributions. Employees can contribute up to $3,200 to health Flexible Spending Accounts in 2024, with a maximum carryover of $640, providing more savings for potential health emergencies.
7. U.S. workers abroad score big with $6,500 boost. The new exclusion is $126,500, up $6,500 from 2023. In short, U.S. citizens working outside the U.S. can reduce their tax bill by excluding an additional $6,500 from income earned in other countries.
8. Beneficiaries can exclude more. Beneficiaries will be able to exclude $13,610,000 of the decedent’s estate, up from $12,920,000 in 2023. This tax change helps the wealthy preserve more of their money for the family, friends, and charitable organizations it’s left to upon their death.
9. Annual exclusion for gifts is getting a bump. The annual exclusion for gifts increases to $18,000 in 2024, allowing individuals to gift this amount without incurring a gift tax.
10. Adoption credits are on the rise. The maximum allowable adoption credit for 2024 is $16,800, aimed at offsetting costs associated with adopting a child. In addition to court costs and attorney fees.
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Resource: moneytalknews.com
