Highlights from the 2024 Tax Legislation: The tax year 2024 adjustments described below generally apply to tax returns that will be filed in 2025. 2024 will call for many tax changes. Keep in mind that a new tax bill can sometime be up to 600 pages or more. We have gathered the highlights of that bill. If you still have questions, please email contact@bpataxes.com
. ⦁ Tax brackets have increased for 2024 due to rising inflation. Please review the tax table to see what tax bracket you will fall under. The table below shows the tax bracket/ rate for each income level:
⦁ Standard Deductions: Please review the Standard Reduction Table below:
•Maximum Earned Income Tax Credit Refund allowed for qualifying taxpayers who have qualifying children.
•Maximum Adjusted Gross Income (AGI): EITC amount you can qualify without going over:
•Standard Deduction for married couples filing jointly has risen to $29,200. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600, and for Heads of Households, the standard deduction will be $21,900.
•Alternative Minimum Tax exemption amount for tax year 2024 is $85,700 and begins to phase out at$609,350 ($133,300 for married couples filing jointly for whom the exemption begins to phase out at$1,218,700).
•The monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $315.
•Health Flexible Spending: The dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200. For cafeteria plans that permit the carryover ofunused amounts, the maximum carryover amount is $640.
•Medical Coverage: Participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,800; but not more than $4,150. For self-only coverage,the maximum out-of-pocket expense amount is $5,550. Family coverage, the annual deductible is not less than $5,550; however, the deductible cannot be more than $8,350. Family coverage, the out-of-pocket expense limit is $10,200.
•Foreign Earned Income exclusion is $126,500
.•Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000.
•Gifts: The annual exclusion for gifts increases to $18,000 for the calendar year.
•Adoptions: Maximum credit allowed for adoptions is the amount of qualified adoption expenses up to$16,810.
• IRA: Contribution limits are $7,000 for those under age 50, and $8,000 for those over 50. You can make 2023 IRA contributions until the unexpended federal tax deadline.
• Child & Dependent Care Credit: Families can claim up to $3,000 in dependent care expenses for one child/dependent and $6,000 for two children/dependents per year. The credit is worth between 20% and 35% of these expenses, depending on a family’s income.
• Charitable Deductions: The new threshold is 60% of AGI for cash contributions held for over a year, and 30% of AGI for non-cash assets.
• 1099-K Delay: The IRSs announces a delay in form 1099-K reporting threshold for 3rd party platform payment. App’s that are affected by this delay are Venmo, PayPal, & Square Cash (AKA Cash App).
• Advance Premium Tax Credit (APTC): If your income or family size changes, this may impact the APTC you receive. If your income varies month-to-month, its important to consider this throughout the year as it may affect your APTC
• EV Tax Credit: The federal tax credit for EVs, up to $7,500, is going to get easier to collect in 2024. As of Jan. 1, EV buyers no longer must wait until they do their taxes to get the credit. In the new year, EV buyers can now ask for the money at the time of purchase.