Welcome to our expert analysis of the 2024 Tax Code changes by Bornazyan & Bornazyan LLP, a tax accounting company in Los Angeles, California. This article is designed to be a quick guide, offering detailed insights into the IRS updates for the 2024 year. It’s essential for individual taxpayers, business owners, and financial professionals seeking to navigate the evolving tax landscape.
2024 Tax Code Changes
Revised Tax Brackets with Inflation Adjustment
Taking into account inflation, the tax brackets for 2024 have been increased by 5.4%. This change may result in tax relief for individuals of different income levels. Tax bracket sizes for single filers, married filers jointly, married filers separately, and head of household will be detailed, helping taxpayers to understand their new tax obligations.
| Filing status | 2023 | 2024 |
| Single or married, filing separately | $13,850 | $14,600 |
| Married, filing jointly | $27,700 | $29,200 |
| Head of household | $20,800 | $21,900 |
Standard Deduction Increase: Enhancing Tax Savings
The standard deduction rises by 5.4%, aligning with the tax bracket adjustments. For 2024, single taxpayers and those married filing separately will see a standard deduction of $14,600, $21,900 for head of household, and $29,200 for married filing jointly. This increase continues the trend of taxpayers opting for standard deductions over itemizing. To learn more about Itemized deductions vs standardized, please visit this IRS website.
Retirement Contribution Limits: Encouraging Savings
Contributions to various retirement plans have been increased by the Internal Revenue Service. The combined employer and employee contribution limit for 401(k) plans has been increased to $69,000, with a maximum employee contribution of $23,000 (pre-tax or Roth) and a catch-up contribution limit of $7,500. SEP IRAs and defined benefit plans, such as pensions, also see similar increases, with specific figures and phase-out ranges provided.
Health Savings Accounts (HSAs): Higher Contribution Limits
HSA contribution limits have been raised: $4,150 for individuals and $8,300 for family coverage in 2024. The catch-up contribution remains at $1,000 for those aged 55 and above.
Adjustments in Required Minimum Distributions (RMD)
Changes in RMD ages as per the Secure Act 2.0 are significant. Those born between 1951 and 1959 will have an RMD age of 73, and for those born in 1960 or later, it is 75. This section will detail the implications for inherited IRAs and required distributions.
Easy to View 2024 Income Tax Brackets
Single Tax Filers in 2024:
| Taxable income | Federal tax rate |
| $11,600 or less | 10% |
| $11,601 – $47,150 | $1,160 plus 12% of income over $11,600 |
| $47,151 – $100,525 | $5,426 plus 22% of income over $47,150 |
| $100,526 – $191,950 | $17,168.50 plus 24% of income over $100,525 |
| $191,951 – $243,725 | $39,110.50 plus 32% of income over $191,950 |
| $243,726 – $609,350 | $55,678.50 plus 35% of income over $243,725 |
| $609,351 or more | $183,647.25 plus 37% of income over $609,350 |
Married Tax Filers in 2024:
| Taxable income | Federal tax rate |
| $23,200 or less | 10% |
| $23,201 – $94,300 | $2,320 plus 12% of income over $23,200 |
| $94,301 – $201,050 | $10,852 plus 22% of income over $94,300 |
| $201,051 – $383,900 | $34,227 plus 24% of income over $201,050 |
| $383,901 – $487,450 | $78,221 plus 32% of income over $383,900 |
| $487,451 – $731,200 | $111,357 plus 35% of income over $487,450 |
| $731,201 or more | $196,669.50 plus 37% of income over $731,200 |
Head of Household Tax Filers in 2024:
| Taxable income | Federal tax rate |
| $16,550 or less | 10% |
| $16,551 – $63,100 | $1,655 plus 12% of income over $16,550 |
| $63,101 – $100,500 | $7,241 plus 22% of income over $63,100 |
| $100,501 – $191,950 | $15,469 plus 24% of income over $100,500 |
| $191,951 – $243,700 | $37,417 plus 32% of income over $191,150 |
| $243,701 – $609,350 | $53,977 plus 35% of income over $243,700 |
| $609,351 or more | $181,954.50 plus 37% of income over $609,350 |
Financial Planning in Light of Interest Rate Increases
Tax Impact on Interest-Bearing Investments
With rising interest rates, it becomes increasingly important to consider how interest income from money market accounts and certificates of deposit will be taxed. In 2024, we will provide insights into managing these investments and their tax consequences.
Legislative Focus: Secure Act 2.0 and TCJA Sunset Provisions
Secure Act 2.0: Broadening 529 Account Uses
The Secure Act 2.0 introduces expanded uses for 529 accounts, a critical aspect for educational savings. Our analysis will cover the practical effects of these changes.
Anticipating Changes in TCJA Provisions
The TCJA sunset provisions are a hot topic, with potential impacts on various tax strategies. We’ll delve into the specifics of these provisions, offering insights into their future and how they might affect taxpayers.
Take steps now to maximize your 2024 tax refund
Taxes aren’t due for several months, but planning ahead now with Bornazyan & Bornazyan Tax Services can pay off. By organizing your finances early, you can identify deductions and credits you may be eligible for. Bornazyan & Bornazyan’s approach to tax planning and preparation could mean a bigger refund next year. To better manage your tax liability, we can help you adjust your withholding or make estimated tax payments. With Bornazyan & Bornazyan Tax Services, you’re less likely to face surprises at tax time, so you can have more control over your financial situation.
