Each tax year introduces new regulations and updates that affect American taxpayers, and 2024 is no exception. From adjustments in inflation to changes in Form 1099-K reporting, here’s an overview of the 2024 tax updates to keep in mind before filing your return.
Quick Highlights:
- Standard Deduction and Contribution Limits: The standard deduction has increased, and there are higher contribution limits for retirement accounts.
- 1099-K Thresholds: Lower reporting thresholds mean more individuals may receive this form in 2024.
- Tax Credits: Updates have impacted several credits, including the Earned Income Tax Credit (EITC) and Adoption Credit.
Federal Tax Bracket Adjustments
The IRS regularly updates federal tax brackets to account for inflation, which may place you in a different tax bracket even if your income hasn’t changed significantly.
2024 Income Tax Rates
The seven individual income tax rates remain the same, ranging from 10% to 37%, based on income levels across filing statuses:
Federal tax bracket changes for 2024
The IRS has made adjustments to the tax brackets to account for inflation. This means you could find yourself in a lower tax bracket, even if your income hasn’t changed much.
2024 Tax Rate Updates
| Tax rate | Single filer | Married filing jointly | Married filing separately | Head of household |
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $11,600 | $0 to $16,550 |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 | $11,601 to $47,150 | $16,551 to $63,100 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 | $47,151 to $100,525 | $63,101 to $100,500 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 | $100,526 to $191,950 | $100,501 to $191,950 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 | $191,951 to $243,725 | $191,951 to $243,700 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 | $243,726 to $365,600 | $243,701 to $609,350 |
| 37% | $609,351 or more | $731,201 or more | $365,601 or more | $609,350 or more |
2024 standard deduction rates
Reflecting the cost of living adjustments, the IRS has increased the standard deduction for each filing status. Here’s how it compares to 2023:
| Tax filing status | Standard deduction 2024 | Standard deduction 2023 |
| Single | $14,600 | $13,850 |
| Head of Household | $21,900 | $20,800 |
| Married filing jointly and surviving spouse | $29,200 | $27,700 |
| Married filing separately | $14,600 | $13,850 |
Additional deductions are also available for those aged 65 or older or for individuals who are blind:
| Age and filing status | 2024 additional standard deduction | 2023 additional standard deduction |
| 65+ OR blind (single and head of household) | $1,950 | $1,850 |
| 65+ AND blind (single and head of household) | $3,900 | $3,700 |
| 65+ OR blind (married filing jointly or separately) | $1,550 (per qualifying individual) | $1,500 (per qualifying individual) |
| 65+ AND blind (married filing jointly or separately) | $3,100 (per qualifying individual) | $3,000 (per qualifying individual) |
1099-K reporting changes for 2024
Updates to Form 1099-K reporting requirements mean that third-party network payments, like those from PayPal®, Venmo®, or eBay®, will now have a lower reporting threshold. Here’s what to expect:
| Form 1099-K rules | 2024 | 2023 |
| Reporting threshold | $5,000 in gross payments | $20,000 in gross payments |
| Transaction threshold | One or more | At least 200 |
This lower threshold means individuals with $5,000 or more in earnings from payment platforms will receive a 1099-K form. Side hustlers and online sellers should understand how to handle Form 1099-K for their taxes.
Tax Tip: It’s essential to keep accurate records of third-party payments. Good documentation can prevent last-minute scrambles during tax season.
2024 Capital Gains Tax Rates
Income from selling assets like stocks, real estate, or cryptocurrency is subject to capital gains taxes. Short-term gains (assets held under one year) are taxed as ordinary income, while long-term gains (held over a year) are taxed at lower rates:
| Tax rate | Single | Married filing jointly | Married filing separately | Head of household |
| 0% | $0 to $47,025 | $0 to $94,050 | $0 to $47,025 | $0 to $63,000 |
| 15% | $47,026 to $518,900 | $94,051 to $583,750 | $47,026 to $291,850 | $63,001 to $551,350 |
| 20% | $518,901 or more | $583,751 or more | $291,851 or more | $551,351 or more |
Earned Income Tax Credit (EITC) changes for 2024
This popular tax credit provides financial support to low- and moderate-income taxpayers. The maximum credit is $7,830 for 2024. Eligibility depends on income, filing status, and the number of qualifying children.
| Number of children living with you | Maximum credit amount | Maximum adjusted gross income (AGI) and earned income |
| 0 | $632 | $18,591 ($25,511 married filing jointly) |
| 1 | $4,213 | $49,084 ($56,004 married filing jointly) |
| 2 | $6,960 | $55,768 ($62,688 married filing jointly) |
| 3 or more | $7,830 | $59,899 ($66,819 married filing jointly) |
Tax Tip: Consider using an EITC calculator to estimate your potential credit.
Important contribution changes for 2024
- 401(k): The 2024 contribution limit is $23,000, with an additional $7,500 allowed for those 50+.
- IRA: The IRA contribution limit has increased to $7,000, with a catch-up contribution of up to $8,000 for individuals 50+.
- Health FSAs: Contributions of up to $3,200 are allowed.
Other 2024 tax changes
- Social Security Cap: The maximum earnings subject to Social Security tax rose to $168,600.
- Alternative Minimum Tax (AMT): The exemption amount increased to $85,700.
- Bonus Depreciation: Businesses can now deduct 60% of qualified property in the first year (down from 80%).
Some aspects remain the same, such as the Child Tax Credit (up to $2,000 per qualifying child), the absence of limits on itemized deductions, and a 0 personal exemption due to the Tax Cuts and Jobs Act.
To learn more, view the official IRS announcement of 2024 inflation changes on irs.gov.
What hasn’t changed from last year?
While many things change in tax law from year to year, some things stay the same. Here are a few constants from last year’s tax code that you can still count on in 2024:
- The Child Tax Credit amount is still the same as in tax year 2023 (up to $2,000 per qualifying child).
- There continues to be no limit on itemized deductions.
- The personal exemption remains at 0 due to the Tax Cuts and Jobs Act.
- The modified adjusted gross income (MAGI) amount used by joint filers to determine the Lifetime Learning Credit (LLC) reduction was not adjusted for inflation. The credit begins phasing out once your MAGI exceeds $80,000 ($160,000 for joint filers).
In conclusion
These updates help you stay informed and ready to file accurately. Stay tuned for any local or state tax changes, and consider consulting with a tax professional for additional guidance.
We know taxes are often the last thing you want to think about, but knowing what has changed from last year can help you better prepare for the upcoming tax season and minimize unpleasant surprises. Be sure to also check for any state tax and local tax updates, and know that The Clarity Agency is here to guide you when you’re ready to file.
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