Key Changes for Tax Year 2024 You Need to Know
Review These Changes Before You File.
As the new year approaches, it's important to understand key tax changes for 2024. Whether you're an individual taxpayer, small business owner, gig worker, or tax professional, staying informed can help you better plan your finances and avoid surprises during tax season. At Correct Choice Tax Solutions, we're here to break down these changes and offer expert guidance to make your tax preparation stress-free.
Federal Tax Brackets for 2024
The IRS has adjusted federal income tax brackets for inflation in 2024. Here’s what you need to know about the new thresholds based on filing status and taxable income:
Single Filer
10% on income up to $11,000
12% on income between $11,001 and $44,725
22% on income between $44,726 and $95,375, and so on.
Married Filing Jointly
10% on income up to $22,000
12% on income between $22,001 and $89,450
22% on income between $89,451 and $190,750, etc.
Federal tax brackets change yearly to adjust for inflation, so make sure you’re aware of the updated numbers to optimize tax savings.
Standard Deduction Rates for 2024
Good news for taxpayers! The IRS has increased standard deduction rates again this year.
Single filers: $14,600 (up from $13,850)
Married filing jointly: $29,200 (up from $27,700)
Head of household: $21,900 (up from $20,800)
If you’re unsure whether to take the standard deduction or itemize your deductions, we can help you decide which option is more beneficial.
1099-K Reporting Changes for Gig Workers
If you’re a freelancer or gig worker, take note. The threshold for receiving a Form 1099-K remains at $600 in annual transactions for business payments through third-party platforms (like PayPal, Venmo, etc.). This lower threshold has been reinstated for 2024 after temporary delays in 2023. Remember to accurately record all sources of income to avoid penalties.
Capital Gains Tax Rates
The tax rates for long-term capital gains remain unchanged, but the income brackets have been adjusted. For 2024:
0% Rate: Applies to taxable income up to $44,625 (single) or $89,250 (married filing jointly).
15% Rate: Applies to taxable income between $44,626 and $492,300 (single) or $89,251 to $553,850 (married filing jointly).
20% Rate: Applies to income over $492,300 (single) or $553,850 (married filing jointly).
Now’s the time to review your investment portfolio and consider tax-efficient strategies.
Earned Income Tax Credit (EITC) Updates
EITC limits have increased for 2024. Here’s a quick look at the credit’s upper earning limits by number of qualifying children:
No children: $17,640 (single) or $24,210 (married joint filers); Max Credit $649
1 child: $46,560 (single) or $53,120 (married joint filers); Max Credit $4,328
2 kids: $52,918 (single) or $59,478 (married joint filers): Max Credit $7,152
3 or more kids: $56,838 (single) or $63,398 (married joint filers); Max Credit $8,046
Even if you don’t owe taxes, the EITC could provide a significant refund. Be sure to claim it if eligible.
2024 Contribution and Retirement Account Changes
Making the maximum contributions to tax-deferred retirement accounts can help you save for the future and lower your taxable income. Contribution limits for 2024 include:
401(k): $23,000 (up from $22,500), with an additional $7,500 for catch-up contributions if you’re 50 or older.
IRA: Stays at $6,500, with a $1,000 catch-up contribution for those over 50.
Don't leave money on the table—maximize your contributions while there’s still time.
Other Tax Changes for 2024
There are updates to the estate tax exclusion, which now rises to $13.61 million per taxpayer.
Changes to Health Savings Accounts (HSA): Contribution limits increase to $4,150 (self-only) and $8,300 (family coverage).
Being proactive about these changes can make a significant difference in your tax liability.
What Hasn’t Changed from Last Year?
Some things have stayed the same for 2024:
Tax filing deadline: Still April 15 (unless it falls on a weekend or holiday).
Income tax rates for 2024: No changes to the overall tax structure.
Child Tax Credit remains up to $2,000 per qualifying child.
The Bottom Line
Preparing for the 2024 tax season doesn’t need to be stressful. Understanding federal tax brackets, deductions, credits, and new thresholds will help you take proactive steps to reduce your tax burden. Want to make sure you’re maximizing your tax savings? Correct Choice Tax Solutions is here to help.
Schedule a free consultation with our team today to take the guesswork out of filing. Together, we’ll make tax season as seamless and efficient as possible. Don’t wait—reach out now and ensure you’re ready for 2024!