The IRS recently announced the 2024 annual inflation adjustments for key tax provisions. Of interest to our clients,
- Standard Deduction: The standard deduction for married couples filing jointly increases by $1,500 to $29,200. For single taxpayers filing separately, the deduction rises to $14,500, and for head of households, the deduction will be $21,900.
- Marginal Rates: The top income tax rate remains at 37% for married couples filing jointly with income greater than $731,200 ($609,350 for single taxpayers). The lowest rate is 10% for couples with income of $23,200 or less ($11,600 for singles). The other rates are:
35% for married filing jointly with income over $487,450 ($243,725 for singles)
32% for married filing jointly with income over $383,900 ($191,950 for singles)
24% for married filing jointly with income over $201,050 ($100,525 for singles)
22% for married filing jointly with income over $94,300 ($47,150 for singles)
12% for married filing jointly with income over $23,200 ($11,600 for singles)
- AMT: The Alternative Minimum Tax exemption will be $133,300 for married couples filing jointly and begins to phase out at $1,218,700. The AMT exemption for singles will be $85,700 with a phase out beginning at $609,350.
- Foreign Earned Income: The foreign earned income exclusion increases by $6,500 to $126,500.
- Estate Tax Credit: The estate tax credit for 2024 will be $13,610,000, up from $12,920,000 in 2023.
- Annual Gift Tax Exclusion: The gift tax annual exclusion will be $18,000 per donee beginning in 2024.
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