As we approach the 2024 tax season, it’s essential for taxpayers to stay informed about recent legislative changes that may impact their filings. At Brown, Chism & Thompson, we understand that tax laws can often be complex and overwhelming. To help you navigate these changes effectively, we’ve outlined some of the most significant updates and implications for your upcoming tax return.
Key Tax Law Changes for 2024
Increased Standard Deduction: For the 2024 tax year, the standard deduction has been adjusted to account for inflation. The new amounts are $14,600 for single filers and $29,200 for married couples filing jointly. This increase means that more taxpayers may benefit from the standard deduction rather than itemizing their deductions, simplifying the filing process.
Changes to Tax Brackets: The IRS has announced adjustments to income tax brackets for 2024. While the marginal tax rates remain the same, the income thresholds for each bracket have been slightly raised. This adjustment is designed to prevent “bracket creep,” where inflation pushes taxpayers into higher brackets without a real increase in their purchasing power.
Child Tax Credit Updates: The Child Tax Credit (CTC) remains a significant benefit for families, but it’s important to note that the maximum credit amount has been modified for 2024. Taxpayers will want to verify their eligibility and ensure they are claiming the correct amount when filing.
Retirement Contributions: The contribution limits for retirement accounts, including 401(k)s and IRAs, have been increased. For 2024, the contribution limit for 401(k)s is $23,000 for individuals under 50, while those aged 50 and older can contribute an additional $7,500 as a catch-up contribution. This change encourages taxpayers to save more for retirement, and we advise our clients to take full advantage of these limits.
Health Savings Account (HSA) Adjustments: The contribution limits for HSAs have also been raised for 2024. Individuals can contribute up to $4,150, while families can contribute up to $8,300. Additionally, those aged 55 and older can still make catch-up contributions of $1,000. Utilizing HSAs can provide tax advantages and is an excellent way to prepare for future medical expenses.
Implications for Taxpayers
As you prepare to file your 2024 taxes, consider the following implications of these changes:
Review Your Withholding: With adjustments to tax brackets and standard deductions, it may be wise to review your withholding status. This ensures that you are not overpaying or underpaying your taxes throughout the year.
Plan for Deductions and Credits: Assess your eligibility for various credits and deductions, particularly if you have experienced life changes such as marriage, the birth of a child, or changes in income.
Maximize Retirement Contributions: Given the increased contribution limits now is an excellent time to evaluate your retirement savings strategy. Ensuring that you are contributing the maximum allowable amounts can have significant long-term benefits.
Stay Informed: Tax laws can change frequently, and it is important to stay informed about new legislation that may affect your financial situation. Consulting with a tax professional can provide personalized insights and recommendations.
Prepare for the 2024 Tax Filing
At Brown, Chism & Thompson, we are committed to helping our clients navigate the ever-changing landscape of tax laws. As you prepare for the 2024 tax season, we encourage you to take these updates into account when planning your filing strategy. If you have questions or need assistance with your tax preparation, please do not hesitate to reach out to our team of experienced professionals. We are here to help you achieve your financial goals while ensuring compliance with the latest tax regulations.
