Tax Inflation Adjustments to Expect in 2024

( – According to the Internal Revenue Service, over sixty tax provisions, such as tax rate schedules and other tax revisions, will undergo yearly inflation adjustments in 2024.

The Inflation Reduction Act restores the Hazardous Substance Superfund funding rate for crude oil that enters the country via U.S. refineries and petroleum products for use, storage, or consumption. The rate of funding for the Hazardous Substance Superfund is adjusted for inflation starting from 2024.

The standard deduction for married taxpayers filing jointly, single taxpayers, married persons filing separately, and heads of households is one of the most notable modifications in Revenue Procedure 2023-34.

Those filing as individuals with earnings over $609,350 ($731,200 for married couples filing jointly) are subject to the maximum tax rate of 37%. In 2024, the exemption from the Alternative Minimum Tax starts to phase out at $609,350 ($133,300 for married couples filing jointly) and continues to phase out at $1,218,700. The exemption limit is $85,700 for individuals.

Taxpayers with three or more eligible children may claim a maximum Earned Income Tax Credit of $7,830 in 2024, up from $7,430 in 2023. An increase of $15 from the limit for 2023 brings the monthly restrictions for qualifying transportation fringe benefits and qualified parking to $315. There is a $3,200 increase to the maximum salary reduction that employees may put into health flexible spending accounts and a $640 increase for cafeteria programs that allow employees to carry over unused amounts.

An annual deductible between $2,800 and $4,150, with an additional $200 for 2023, will be required for individuals having self-only coverage in a Medical Savings Account for the tax year 2024.

Beginning in calendar year 2024, the yearly exclusion for gifts rises to $18,000, and the maximum credit that may be claimed for adoptions is up to $16,810.

The 2024 personal exemption will be zero, the same as in 2023.

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