8 Tax Changes Every Filer Needs To Know About Before 2024 Ends

When the holidays are near, it can be a time of great celebration. But the end of the year can signal something else around the corner, too: tax season. As the traditional April 15 due date approaches, you may begin to wonder if you’re going to encounter any surprising financial mistakes when it comes time to file.

But don’t worry, while the IRS makes adjustments, usually to deal with inflation, it’s not as scary as one might think. You just need to be aware of what those changes are and how it might impact your tax bill to Uncle Sam.

Keep reading to learn about the eight things changing in the new year.

Tax bracket tweaks

Tax brackets change every year. The IRS announces these changes well ahead of time so that taxpayers know what the deal is. The brackets for the incoming tax season have been specifically adjusted to deal with inflation, though inflation itself is down from 2023.

The 2024 brackets are:

• The top tax rate is still 37% for singles who make more than $609,350 or $731,200 for married couples filing jointly.
• 35% for single incomes over $243,725 | $487,450 for married couples filing jointly.
• 32% for single incomes over $191,950 | $383,900 for married couples filing jointly.
• 24% for single incomes over $100,525 | $201,050 for married couples filing jointly.
• 22% for single incomes over $47,150 | $94,300 for married couples filing jointly.
• 12% for single incomes over $11,600 | $23,200 for married couples filing jointly.
• And the lowest rate is 10% for singles earning $11,600 or less, and $23,200 for married couples filing jointly.

1099-K changes

Not everyone gets a 1099-K, but it’s important to know what it is.

In short, Form 1099-K is a document that reports payments you received throughout the year for goods or services from things like credit, debit, prepaid cards — including gift cards — payment platforms, or online marketplaces such as Paypal. It’s their responsibility to complete Form 1099-K and provide copies to both the IRS and you.

The changes have to do with reporting thresholds. For 2024, it’s $5,000. In 2025, it’ll be $2,500, then $600 for 2026 and beyond.

Retirement plan updates

It’s important to stay abreast of how tax code changes can impact your retirement plans, especially if you want to keep more cash in your wallet. Every adjustment the IRS makes can have significant implications when it comes to your golden years.

401(k) and IRA contribution limits increase

If you’re big on contributing to your retirement savings accounts 2024 offers some good news: The limits on how much you can contribute is up to $23,000.

That includes 401(k), 403(b), most 457 plans, and Uncle Sam's federal Thrift Savings Plan.

IRA contributions got a boost as well with the new yearly limit plugged in at $7,000. The catch-up limit for those 50 and over hasn’t changed — it’s still $7,500. But overall you can sock away a hefty $30,500.

Income limits for Roth IRA contributions are different

The income limits for your Roth IRA contributions have gone up.

The new “phase-out range,” as the IRS puts it, is $146,000 to $161,000 for singles and $230,000 to $240,000 for married couples filing jointly. In addition, the Saver’s Credit income limit is now $76,500 for joint filers, $57,375 for heads of household, and $38,250 for singles. SIMPLE retirement account contribution limits also increased to $16,000, up from $15,500.

Deduction limits get a boost for traditional IRA contributions

You can deduct contributions to a traditional IRA if specific conditions are met. But bear in mind that if the taxpayer or their spouse is covered by a workplace retirement plan, the deduction can be reduced or phased out based on income and filing status. If neither person is covered, the phase-out rules don't apply.

Here are the 2024 phase-out ranges:

• Single filers: $77,000 to $87,000.
• Married filing jointly (covered spouse): $123,000 to $143,000.
• Non-covered IRA contribution member married to a covered spouse: $230,000 to $240,000.
• Married filing separately (covered): Still $0 to $10,000.

The standard deduction is up

The IRS’s standard deduction is a go-to tax break for folks who don’t itemize. And for 2024, it went up. Here are the new amounts:

• $29,200 for married filing jointly or a qualifying surviving spouse.
• $21,900 for heads of household.
• $14,600 for singles or married filing separately.

Additional Standard Deduction for 65+ or Blind:

• $1,950 for singles or heads of household.
• $1,550 for married filing jointly or qualifying surviving spouse.

And dependents: For dependents, the 2024 standard deduction is either the greater of $1,300 or $450 plus their earned income.

Some tax deductions to consider

The federal government provides a lot of ways to reduce your tax bill if you, or your adviser, know where to look — though you may need to itemize.

• Giving to charity: Charitable donations, including goods, mileage for volunteering, and cash, can lower taxes, but must not exceed 60% of AGI and require detailed records.
• Medical and dental: Taxpayers can deduct medical and dental expenses exceeding 7.5% of AGI, including health professional services, for themselves or dependents.
• For military members: Active-duty military can deduct unreimbursed moving expenses for permanent station changes, covering travel, lodging, and household items (excluding meals).

Bottom line

The U.S. tax code might seem like a bit of a nightmare if you’re not familiar with it, but that’s precisely why being aware of these changes can ease your tax filing, eliminate some money stress, and maybe even help you save.

The core thing to remember is that the changes — some big, some small — happen every year, so it behooves you and your bank account to stay informed.

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