Staying Ahead of Tax Updates
The 2024 tax year brings several important changes for U.S. taxpayers, from inflation-adjusted deductions to expanded tax credits. Whether you’re an individual filer or a business owner, understanding these updates is critical for effective tax planning and compliance. This article highlights the most significant US 2024 tax changes to help you prepare for the upcoming filing season.
1. Inflation-Adjusted Tax Brackets and Standard Deduction
In response to rising costs, the IRS has adjusted tax brackets and standard deductions for 2024:
- The standard deduction increases to $14,600 for single filers and $29,200 for married couples filing jointly.
- Tax brackets have been widened slightly, potentially reducing your overall tax liability.
These adjustments ensure that taxpayers keep more of their earnings, particularly those impacted by inflation.
2. Higher Retirement Contribution Limits
The IRS has raised contribution limits for popular retirement plans, allowing taxpayers to save more while reducing taxable income:
- 401(k): Contribution limits increase to $23,000, with an additional $7,500 for catch-up contributions for those 50 and older.
- IRA: The annual contribution limit rises to $7,000, with a $1,000 catch-up option.
These increases provide an excellent opportunity to bolster your retirement savings while optimizing your tax position to under a tax-deferred basis
3. Changes to Electric Vehicle (EV) Tax Credits
Taxpayers purchasing electric vehicles in 2024 should be aware of updated eligibility rules:
- The Clean Vehicle Credit remains available for new EVs that meet North American assembly requirements and strict battery sourcing rules.
- A new used EV credit offers up to $4,000 for qualifying purchases, making EV ownership more accessible.
Verify eligibility using the IRS EV lookup tool before making a purchase.
4. Energy Efficiency Home Improvement Credit
Homeowners investing in energy-efficient upgrades can claim enhanced credits in 2024:
- Up to $1,200 annually for energy-efficient doors, windows, and insulation.
- An additional $2,000 for qualifying heat pumps and other advanced systems.
This credit encourages green improvements while providing a direct tax benefit.
5. Updates to the Child Tax Credit
The Child Tax Credit remains at $2,000 per qualifying child for 2024, but some parameters have changed:
- Income phaseouts begin at $200,000 for single filers and $400,000 for married joint filers.
- Enhanced benefits for children under six have expired, reverting to pre-pandemic levels.
Families should assess their eligibility to ensure they’re taking full advantage of this credit.
6. SALT Deduction Cap Remains
The cap on state and local tax (SALT) deductions remains at $10,000 for 2024, despite ongoing discussions about changes. This limitation continues to affect taxpayers in high-tax states. Strategic planning can help mitigate its impact.
Why These Changes Matter
The US 2024 tax changes are more than just incremental updates—they can directly affect your tax liability, savings opportunities, and financial strategy. Whether it’s contributing more to your retirement accounts or claiming new energy efficiency credits, these updates offer ways to optimize your tax return and align with your broader financial goals.
How TMP Can Help
At TMP, we specialize in helping individuals and businesses navigate the complexities of tax law. With a deep understanding of the US 2024 tax changes, our CPAs provide tailored advice to ensure compliance and help you make the most of every opportunity.
Contact us today to schedule a consultation and prepare for a seamless tax season.
