IRS Announces Adjustments for Taxes in 2024

The Internal Revenue Service (IRS) recently announced updates to tax brackets, deductions, and other provisions for the 2024 tax year. These changes, outlined in Revenue Procedure 2023-34, will generally apply to tax returns filed in 2025.

Key Changes for Individuals:

  • Standard Deduction: Good news for taxpayers! The standard deduction increases for all filing statuses:
    • Married filing jointly: $29,200 (up $1,500)
    • Single and married filing separately: $14,600 (up $750)
    • Head of household: $21,900 (up $1,100)
  • Tax Brackets: No major changes here. The top tax rate of 37% remains for high earners, while other rates adjust slightly for inflation.
  • Alternative Minimum Tax (AMT): The AMT exemption rises to $85,700 and starts phasing out at higher income levels.
  • Earned Income Tax Credit (EITC): The maximum EITC amount for families with three or more qualifying children increases to $7,830. Check the revenue procedure for details on other categories and income thresholds.
  • Transportation and Healthcare Benefits: Monthly limits for qualified transportation and parking benefits, as well as contributions to health flexible spending arrangements, see small increases.
  • Medical Savings Accounts (MSAs): Deductible and out-of-pocket expense limits for MSAs rise for both individual and family coverage.

Other Notable Changes:

  • Foreign earned income exclusion, estate tax exemption, annual gift exclusion, and adoption credit all receive inflation adjustments.
  • Certain items like the personal exemption and itemized deduction limitation remain unchanged due to previous tax legislation.

Stay Informed:

For a complete overview of all changes, consult Revenue Procedure 2023-34 on the IRS website.

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