The IRS has announced the inflation adjustments for tax year 2024, including changes to standard deduction and income tax brackets. Find out the new dollar amounts and rates in this article.
The Internal Revenue Service (IRS) has recently released the updated inflation adjustments for tax year 2024. These adjustments include changes to the standard deduction, federal income tax brackets, and various other provisions.
For married couples filing jointly, the standard deduction for tax year 2024 will rise to $29,200, which is $1,500 higher than the previous year. Single taxpayers and married individuals filing separately will see an increase as well, with the standard deduction rising to $14,600 for 2024, a $750 increase. Heads of households will have a standard deduction of $21,900 for tax year 2024, an increase of $1,100.
The IRS has also announced the new dollar amounts that will apply to the federal income tax brackets for tax year 2024. The top marginal tax rate will remain at 37% for individual single taxpayers with incomes exceeding $609,350. For married couples filing jointly, the threshold is set at $731,200. The other tax rates and corresponding dollar amounts for 2024 are as follows:
These adjustments aim to keep up with inflation and ensure that taxpayers are aware of any changes that may affect their tax obligations for the upcoming year. It is essential to review these updates and consult with a tax professional to ensure accurate filing.
For tax year 2024, the Alternative Minimum Tax (AMT) exemption amount is $85,700. The phaseout for the exemption begins at $609,350. Married couples filing jointly have an exemption of $133,300, which starts phasing out at $1,218,700. The AMT is a complex calculation where some taxpayers must determine their liability twice — under ordinary income tax rules and also under AMT rules — paying the higher amount. The Tax Cuts and Jobs Act of 2017 increased the AMT's exemption and exemption phaseout through 2025. As a result, the number of affected taxpayers has significantly decreased from around 5 million to approximately 200,000, according to the Tax Foundation.
In 2024, the maximum amount that employees can contribute to their pretax health flexible-spending accounts is $3,200, a slight increase from $3,050 in the previous year.
In 2024, the basic exclusion amount for estates of individuals who pass away has been raised to $13,610,000. This is an increase from the previous year's amount of $12,920,000.
Additionally, the annual exclusion for gifts has also been updated. For the calendar year 2024, the exclusion amount has been raised to $18,000, compared to $17,000 in the previous year.
For more detailed information and a comprehensive list of all the provisions, please refer to the provided link.
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