Every tax season comes with updates to the tax code, and 2024 is no exception. Understanding these changes can help you plan better, avoid surprises, and even maximize your refund. Here’s a breakdown of the most important tax law updates for this year.
- Standard Deduction Increases
The IRS has adjusted the standard deduction for inflation, which means you may see a slight
increase in your deduction this year:
- Single filers: $13,850 (up from $12,950)
- Married filing jointly: $27,700 (up from $25,900)
- Head of household: $20,800 (up from $19,400)
If you don’t itemize, this change gives you a larger tax break automatically.
- Tax Bracket Adjustments
Tax brackets have been adjusted for inflation, which may lower your overall tax liability. For example:
- 10% bracket: Up to $11,000 (single) or $22,000 (married filing jointly)
- 12% bracket: $11,001 to $44,725 (single) or $22,001 to $89,450 (married filing jointly)
Higher brackets have also shifted, so you may fall into a lower bracket compared to last year.
- Changes to Tax Credits
- Child Tax Credit: Remains at $2,000 per qualifying child, but income phase-out limits have increased slightly.
- Earned Income Tax Credit (EITC): Maximum credit amounts have been adjusted for inflation, with higher limits for households with children.
- Energy-Efficient Home Improvement Credit: Homeowners can now claim up to $3,200 annually for installing energy-efficient upgrades like solar panels or heat pumps.
- Retirement Contribution Limits
The IRS has increased contribution limits for retirement accounts to help you save more:
- 401(k) contributions: Increased to $22,500 (up from $20,500), with a $7,500 catch-up contribution for those over 50.
- IRA contributions: Increased to $7,000 (up from $6,500), with a $1,000 catch-up contribution for those over 50.
- Clean Vehicle Credit
If you’re thinking of buying an electric or hybrid vehicle, the Clean Vehicle Credit allows up to $7,500 in savings. To qualify, the vehicle must meet specific U.S. manufacturing requirements.
- HSA Contribution Limits
Health Savings Account (HSA) contribution limits have increased:
- Individual coverage: $4,150
- Family coverage: $8,300
- Catch-up contributions (55+): An additional $1,000
Maximizing these contributions can lower your taxable income.
- Increased Limits for Gift and Estate Taxes
The annual exclusion for tax-free gifts has increased to $17,000 per recipient, up from $16,000. This change benefits those looking to transfer wealth while minimizing tax liability.
Why These Changes Matter
Staying informed about tax law updates ensures you don’t miss out on savings and helps you avoid mistakes when filing. Even small adjustments, like increased deductions or credits, can add up to significant savings.
Let Jose’s Tax Service Guide You
Navigating tax law changes can be confusing, but Jose’s Tax Service is here to make it easy. Our team stays up-to-date on the latest tax laws to ensure you get every deduction and credit you’re entitled to.
👉 Ready to file with confidence? Contact us today and let us handle the complexities for you.
Stay ahead of the game this tax season by understanding these changes. With expert help from Jose’s Tax Service, you can file with ease and maximize your refund. Let’s make this your best tax season yet!