As we approach the year-end and the due date for filing tax returns for 2024 is fast approaching, it’s crucial to stay informed about the latest tax changes that could affect your filing. Each year, the IRS makes adjustments to tax rates, deductions, and credits, and understanding these updates can help ensure you maximize your refund or minimize your tax liability. Here’s a breakdown of the key changes for Tax Year 2024 that you need to know before you file.
- Increased Standard Deduction For 2024, the standard deduction has been slightly increased due to inflation adjustments. Single filers can claim $27,700, while married couples filing jointly will benefit from a deduction of $55,400. This higher standard deduction could make it easier for many taxpayers to reduce their taxable income, as it increases the amount of income that is not subject to tax.
- Tax Bracket Adjustments The IRS has raised the income thresholds for each tax bracket to account for inflation. Although the tax rates remain unchanged, the higher income thresholds mean that more of your income may be taxed at lower rates. This adjustment can help reduce your overall tax burden, especially if you’re on the edge of a tax bracket.
- Child Tax Credit Changes The Child Tax Credit remains at $2,000 per qualifying child under 17 for Tax Year 2024. However, the phase-out limits have been adjusted, allowing more families to qualify for the full credit. For higher-income earners, the threshold for when the credit begins to phase out is now higher, meaning that more families will be able to benefit from this valuable tax break.
- Retirement Contribution Limits The contribution limits for retirement accounts have increased for 2024. You can contribute up to $23,000 to a 401(k) and $7,000 to an IRA. These higher limits give you more opportunities to save for retirement while also reducing your taxable income.
- State-Specific Changes Don’t forget to review any changes to your state’s tax laws, as many states make their own adjustments to income taxes, deductions, and credits. It’s essential to be aware of these to avoid surprises when filing your state return.
With these changes in mind, now is the time to review your finances and prepare for filing. We are a team of experts who can definitely guide you through the process and help you take full advantage of these updates, ensuring you don’t miss any opportunities to reduce your tax burden. Consulting with a tax professional can ensure that you navigate these changes smoothly and avoid common pitfalls as the deadline approaches.