2024 Tax Inflation Adjustments
We have only just said goodbye to 2023 and are already planning for 2024. The IRS has released the updated annual inflation adjustments for more than 60 tax provisions for the year 2024. There were some increases. Below we summarize the most common of these adjustments.
Standard Deduction
Consider this the amount of income you can earn tax free.
| FILING STATUS | 2024 | 2023 |
| Single and Married Filing Separate | $14,600 | $13,850 |
| Married Filing Joint | $29,200 | $27,700 |
| Head of Household | $21,900 | $20,800 |
Tax Rates
The tax rates will remain the same through 2025, but the range of the brackets have increased. Higher income brackets benefit from larger increases in the bracket structure than those in the lower brackets.
| INCOME WHERE BRACKET BEGINS | 2024 (MFJ) | 2023 (MFJ) |
| 37% | $731,200 | $693,750 |
| 35% | $487,450 | $462,500 |
| 32% | $383,900 | $364,200 |
| 24% | $201,050 | $190,750 |
| 22% | $94,300 | $89,450 |
| 12% | $23,200 | $22,000 |
| 10% | $0 | $0 |
| INCOME WHERE BRACKET BEGINS | 2024 (SINGLE) | 2023 (SINGLE) |
| 37% | $609,350 | $578,125 |
| 35% | $243,725 | $231,250 |
| 32% | $191,950 | $182,100 |
| 24% | $100,525 | $95,375 |
| 22% | $47,150 | $44,725 |
| 12% | $11,600 | $11,000 |
| 10% | $0 | $0 |
Health Savings Account (HSA) Deduction
If you have a qualifying plan, take advantage of this deduction as it is generally one of the few ways to actually get a tax benefit out of medical expenses.
| PLAN TYPE | 2024 | 2023 |
| Single | $4,150 | $3,850 |
| Family | $8,300 | $7,750 |
| Over Age 55 Catch-Up | $1,000 | $1,000 |
Retirement Plan Contributions
If able, utilize retirement plan deductions to their fullest to shelter income today for use during retirement.
| PLAN TYPE | 2024 | 2023 |
| 401(k) | $23,000 | $22,500 |
| Over 50 401(k) Catch-Up | $7,500 | $7,500 |
| SIMPLE | $16,000 | $15,500 |
| Over 50 SIMPLE Catch-Up | $3,500 | $3,500 |
| IRA (Traditional or Roth) | $7,000 | $6,500 |
| Over 50 IRA Catch-Up | $1,000 | $1,000 |
| SEP | $69,000 | $66,000 |
Gift and Estate
The annual gift limit should be used to reduce a taxable estate. While the estate limits are large now, they are scheduled to be cut roughly in half post 2025. Even if a decedent does not have an estate near the limit, consider filing an estate tax return to retain portability if a surviving spouse may be close to a limit under a reduced exemption.
| TYPE | 2024 | 2023 |
| Annual Gift Limit | $18,000 | $17,000 |
| Estate Exclusion Amount | $13,610,000 | $12,920,000 |
Unfortunately, limits on itemized deduction and education credits remain the same.
While we have seen some respectable adjustments to the limits noted above in recent years, keep in mind that Taxpayer Jobs and Cuts Act will expire at the end of the 2025 tax year. Unless something is done to renew or replace it expect some serious jolts to the tax system when rates go back up and exemptions go down.
Kelly Jackson Hardy is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers, privately-held elevators and supply dealers, and cooperatives. Kelly is a principal with CliftonLarsonAllen in Princeton, Illinois, as well as a regular speaker at tax and estate planning seminars. Kelly was raised on a hog, row crop and cattle farm in central Illinois and has been involved in the ag industry her entire life. Kelly, her husband, and two sons are active in 4-H and operate a small feeder calf operation and pumpkin business.
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