Key Tax Tips for 2024: What’s New This Year

As tax season gears up, staying informed about updates and changes can help you maximize deductions and credits. Here’s a quick guide to what’s new for tax year 2024, from standard deductions to retirement account rules.

Higher Standard Deduction

The standard deduction has increased, allowing most taxpayers to deduct more without itemizing:

• $14,600 for single filers and married couples filing separately.
• $21,900 for heads of household (unmarried with dependents).
• $29,200 for married couples filing jointly.

Child Tax Credit

Families can still benefit from the Child Tax Credit, which is $2,000 per child under 17. This credit begins to phase out for:

• Joint filers earning over $400,000.
• Single filers earning over $200,000.
  A $500 credit is available for other qualifying dependents.

Estate Tax Exemption

The estate and gift tax exemption for individuals with significant estates rose to $13.6 million in 2024. Unless Congress acts, it is expected to drop to just over $5 million in the coming years, making this a critical time to review estate plans with a financial advisor.

Retirement Savings Limits

Planning for the future? You can save more in 2024:

• IRA contributions: Up to $7,000, plus a $1,000 catch-up contribution for those 50 or older.
• 401(k) contributions: Up to $23,000, with additional catch-up options for older savers.

Required Minimum Distributions (RMDs)

If you are 73 or older, you must take an RMD from your retirement accounts before the year ends to avoid a 25% penalty. However, first-timers can wait until April 2025.

Make the Most of Your 2024 Taxes

These changes offer opportunities to lower your tax bill, from deductions to retirement contributions. Consulting with a financial advisor or tax professional can ensure you stay compliant and make the most of your finances, especially when navigating complex areas like estate planning or RMDs.