Page 33 - BusinessWest June 17, 2024

of the 2024 filing season. Since that deadline has passed, the goal is still to get the bill passed as soon as possible to minimize the administrative burdens on the IRS. There is no current date set for a Senate vote, and with this being an election year, the likelihood is slim.
As a result, planning for 2024 will not be much different than 2023, but let’s summarize the few changes, primarily inflation-relat- ed adjustments, effective for 2024. Pay attention to these changes because they can hurt or help your bottom line. Use this informa- tion now so you can hold on to more of your hard-earned money when it’s time to file your 2024 federal income tax return in early 2025.
Individual Tax Changes
Retirement Savings
Key dollar limits on workplace retirement plans and IRAs increase in 2024. The maximum 401(k) contribution is $23,000. People born before 1975 can contribute an extra $7,500. These limits also apply to 403(b) and 457 plans.
SIMPLEs have a $16,000 cap, plus $3,500 for individuals age 50 and older.
The 2024 contribution cap for traditional IRAs and Roth IRAs is $7,000, plus $1,000 as an additional catch-up contribution for indi- viduals age 50 and older.
The income ceilings on Roth IRA pay-ins are higher for 2024. Contributions phase out at adjusted gross incomes of $230,000 to $240,000 for joint filers and $146,000 to $161,000 for single filers.
2024 deduction phaseouts for traditional IRAs range from adjusted gross incomes of $123,000 to $143,000 for joint filers cov- ered by 401(k) plans and $77,000 to $87,000 for single filers and heads of household. If only one spouse is covered by the plan, the phaseout range for deducting pay-ins for the uncovered spouse is $230,000 to $240,000.
Adoption Tax Credit
The adoption credit is taken on up to $16,810 of qualified
expenses in 2024. The full credit is available for a special-needs adoption even if it costs less. The credit phases out for filers with modified AGIs over $252,150 and ends at $292,150.
Standard Deduction
Standard deduction amounts for 2024 have been inflation- adjusted and are higher than they were last year.
The income-tax brackets for individuals are much wider for 2024 because of inflation during the 2023 fiscal year. Tax rates are unchanged.
Capital Gains and Qualified Dividends
The favorable tax rates on long-term capital gains and qualified dividends do not change. But the income thresholds to qualify for the various rates go up for 2024. The 0% tax rate applies at tax- able incomes up to $94,050 for joint filers, $63,000 for heads of household, and $47,025 for single filers. The 20% tax rate starts
at $583,751 for joint filers, $551,351 for heads of household, and $518,901 for single filers. The 15% tax rate is for filers with taxable incomes between the 0% and 20% break point.
The annual gift tax exclusion for 2024 is $18,000 per donee. That means in 2024, you can gift up to $18,000 ($36,000 if your spouse agrees) to each child, grandchild, or any other person with- out having to file a gift-tax return or tap your lifetime estate and gift tax exemption. Annual gifts over the exclusion amount will trigger filing of a gift tax return for 2024, but no gift tax will be due unless your total lifetime gifts exceed $13,610,000.
Business Tax Changes
Depreciation
First-year bonus depreciation isn’t as valuable in 2024. Last year, businesses could deduct 80% of the cost of new and used qualify- ing business assets with lives of 20 years or less. This year, the 80% writeoff decreases to 60%.
However, Section 179 expensing is higher.
Changes
Continued on page 35
“Standard deduction amounts for
2024 have been inflation-adjusted and are higher than they were last year.”
>>
Avoid A Midyear Crisis.
At MBK, we are more than just tax advisors. We work with you to understand your business objectives, personal goals and fiduciary responsibilities. We use our in-depth knowledge to develop effective, proactive strategies to put you in the most tax advantageous position possible. And we’re here for you all year long — not just during tax season.
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