It’s never too early to plan for the upcoming tax season. While the 2024 tax code is far from finalized, some important changes have already been announced.
Inflationary pressures have prompted changes to tax brackets and an increase in standard deductions for all filing statuses. Standard deductions allow taxpayers to lower their taxable income based on their filing status. The 2024 standard deductions are:
- Single or Married Filing Separately: $14,600 (up from $13,850)
- Married Filing Jointly: $29,200 (up from $27,700)
- Head of Household: $21,900 (up from $20,800)
Retirement plan contribution limits have also increased by $500 for many savings options. Notable changes have been made to capital gains tax thresholds, FSAs, HSAs, and gift tax exclusions. Retirement plan contribution changes include:
- 401(k) and 403(b) plans increase to $23000 annually
- Employees aged 50 and over can contribute an additional $7500 for a total of $30,500
- IRA contribution limit increases to $7000 annually ($8000 for those over 50 years of age)
As the second half of the year progresses, now is the time to evaluate your paystubs. Changes to marginal tax brackets have resulted in many individuals having little to no federal withholding from their paychecks. While this has been an effective strategy for putting more money in an individual’s paycheck, there will be unexpected tax consequences in April, 2025. It isn’t too late to change your federal withholding and avoid surprises when tax filing season rolls around. Make an appointment to sit down and talk with our tax specialists about your current withholding and the potential tax implications.
To read further about the upcoming changes, visit 2024 Tax Changes to Know.