The Internal Revenue Service recently released updated income tax brackets, standard deductions, and retirement contribution limits for the 2024 tax year.
Tax Bracket Inflation Adjustment
Tax brackets have been adjusted upwards by 5.4% for 2024. The primary purposes of this adjustment is to account for inflation because the government’s goal is to keep income taxes in sync with consumer buying power.
Standard Deduction
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 are up $500 in 2024 to $7,000. Catch-up contributions for those over age 50 remained at $1,000, bringing the total limit to $8,000.
Roth IRAs
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). Married individuals filing separately see their phase-out range remain at $0-10,000.
Workplace Retirement Accounts
Those 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.
Gift Tax
The annual gift tax exclusion is now $18,000 for 2024, an increase of $1,000 from the previous year.
For more information on what these updates mean for the you and your business, contact the qualified attorneys at Rock, Fusco & Connelly.