The IRS has announced various updates for the 2024 tax year that affect individual and business taxpayers. Here are some of the key tax law changes:
Standard Deductions: The standard deduction for married couples filing jointly increases to $29,200, an increase of $1,500 from 2023. For single filers, the deduction rises to $14,600, and heads of households can claim $21,900, up $1,100 from last year.
Tax Brackets and Rates: The income thresholds for each tax bracket have been adjusted for inflation. The top marginal tax rate remains 37%, applicable to single taxpayers with income above $609,350 and married couples filing jointly with income over $731,200. Lower brackets have also been adjusted, making more income subject to lower rates.
Gift Tax Exemption: The annual gift tax exclusion has been raised to $18,000 per recipient, up from $17,000 in 2023. This increase allows individuals to give slightly more tax-free.
Alternative Minimum Tax (AMT): For 2024, the AMT exemption amount is increased to $85,700 for individuals and $133,300 for married couples filing jointly. The phase-out thresholds have also risen to accommodate inflation.
Retirement Contributions and Adoption Credit: There is an increase in the maximum qualified adoption credit to $16,810. Contribution limits for retirement accounts are also expected to increase, though details are specific to the retirement plan type.
These adjustments are generally based on inflation and are intended to help taxpayers save by reducing taxable income limits and increasing allowable deductions. These updates apply to returns filed in 2025 for the 2024 tax year. For additional details, you can refer to the IRS and tax guidance resources.
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