Overview of tax year 2024:
Tax Rates
Tax rates have been lowered and income thresholds have increased, reducing taxable income. Top tax rate has stayed the same at 37% and the bottom rate at 10%. AMT exemption amount has also increased!
Standard Deduction
Standard deduction increases to $14,600 for individuals, $21,900 for head of household, and $29,200 for married couples.
Exemptions
Personal exemptions are still gone.
Child Tax Credit
The Child Tax Credit is back to $2,000 per qualifying child, of which $1,900 is refundable. For each non-child dependent the credit remains at $500. The Child Tax Credit begins to decrease to $2,000 per child if adjusted gross income exceeds $400k MFJ and $200k for all other filers.
Deduction For Qualified Business Income
Pass-through entities, such as, an S corporation, partnerships, and sole proprietorship's whose profits pass-through to the owner on their personal tax return, can still deduct up to 20% of their qualified business income if certain requirements are met. The income threshold has increased for SSTB companies!
Mortgage Interest
Still deductible, but the interest deduction will be allowed for up to $750,000 in mortgage principal on new homes purchased after December 15, 2017. The home-equity loan interest deduction may be tax deductible if certain criteria is met.
State and Local Income Tax Deduction
Deduction is allowed up to $10,000 a year for state and local income taxes, including property taxes.
Medical Expenses
Taxpayers can deduct medical expenses that are 7.5% or more of adjusted gross income. The penalty for not having health insurance is gone!
Charitable Contributions
For those who itemizing, cash donations are limited to 60% of adjusted gross income. Save receipts!
IRA Contribution Limitations
Contribution limits for under age 50 increased to $7,000 and catchup of $1,000 for age 50 and over. Deduction limitations are phased out at $143k for married filing jointly and $87k for single and head of household for those enrolled in an employer plan.
Alimony Changes
Divorce or separation agreements executed after December 31, 2018 will now fall under the new tax code. Alimony received or paid under the new tax code are no longer taxable or tax deductible. Divorce or separation agreements prior to the end of 2018 may fall under the new tax code if the agreement was modified to the new tax standards.
Still gone...
Moving expenses, casualty and theft losses, and the miscellaneous deduction section are still gone. Moving expenses may be deductible in your state!
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