The Internal Revenue Service announced its annual inflation adjustments last week.
The IRS issued a press release describing the 2024 tax year adjustments that generally apply to income tax returns filed in 2025.
The following points are from the press release and are of greatest interest to most taxpayers, according to the IRS:
The standard deduction for married couples filing jointly for the 2024 tax year increases to $29,200, an increase of $1,500 from the 2023 tax year.
For single people and married people who file taxes separately, the standard deduction increases to $14,600 in 2024, an increase of $750 from 2023.
For heads of household, the standard deduction for the 2024 tax year is $21,900, an increase of $1,100 over the amount for the 2023 tax year.
For the 2024 tax year, the top tax rate remains 37% for single taxpayers with income greater than $609,350 ($731,200 for married couples filing jointly).
35% for income over $243,725 ($487,450 for married couples filing jointly).
32% for income over $191,950 ($383,900 for married couples filing jointly).
24% for income over $100,525 ($201,050 for married couples filing jointly).
22% for income over $47,150 ($94,300 for married couples filing jointly).
12% for income over $11,600 ($23,200 for married couples filing jointly).
The lowest rate is 10% for single filers earning $11,600 or less ($23,200 for married couples filing jointly).
The following list includes other highlights that the IRS believed taxpayers would be interested in:
The amount of the alternative minimum exemption for the 2024 tax year is $85,700 and begins to phase out at $609,350 ($133,300 for married couples filing jointly, for whom the exemption phases out at $1,218,700). For comparison, in 2023, the exemption amount was $81,300 and began expiring at $578,150 ($126,500 for married couples filing jointly, for whom the exemption expired at $1,156,300).
The maximum amount of the Earned Income Tax Credit for tax year 2024 is $7,830 for eligible taxpayers with three or more qualifying children, an increase from $7,430 for tax year 2023. The Revenue Procedure includes a table showing the maximum EITC amount for others Categories, income thresholds, etc. exits.
For taxable year 2024, the monthly qualified transportation fringe benefit limit and the monthly qualified parking limit increase to $315, an increase of $15 over the 2023 limit.
For tax years beginning in 2024, the employee salary reduction dollar limit for contributions to flexible health spending arrangements increases to $3,200. For cafeteria plans that allow the carryover of unused amounts, the maximum carryover amount is $640, an increase of $30 over tax years beginning in 2023.
For taxable year 2024, for participants who have self-only coverage in a medical savings account, the plan must have an annual deductible of at least $2,800, an increase of, but not more than, $150 over taxable year 2023 $4,150, an increase of $200 beginning with the 2023 tax year. For self-insurance, the maximum deductible is $5,550, an increase of $250 from 2023. For the 2024 tax year, the annual deductible for family insurance is not less than $5,550 increase of $200 beginning in tax year 2023; However, the deductible cannot exceed $8,350, a $450 increase over the limit for the 2023 tax year. For family coverage, the deductible limit for the 2024 tax year is $10,200, an increase of $550 from the 2023 tax year.
For the 2024 tax year, the foreign earned income exclusion is $126,500, up from $120,000 for the 2023 tax year.
A basic exclusion amount of $13,610,000 applies to estates of decedents who died in 2024, increasing from $12,920,000 for estates of decedents who died in 2023.
The annual gift exclusion increases to $18,000 for calendar year 2024, up from $17,000 for calendar year 2023.
The maximum allowable adoption credit for the 2024 tax year is the amount of qualified adoption expenses up to $16,810, increased from $15,950 for 2023.
Originally posted 2023-11-12 17:50:15.