The 2024 tax season is here, and it’s time to start preparing. For most taxpayers, the filing deadline is April 15, 2024, so it’s important to stay on top of any changes that could impact your return. This year brings updates to tax brackets, adjustments to popular credits like the Child Tax Credit, and revised contribution limits for retirement and health accounts.
By understanding what’s new, you can make more informed decisions and potentially maximize your tax savings. This guide will walk you through the key updates and reminders for 2024 to help ensure a smooth and stress-free filing experience.
What’s New for the 2024 Tax Year?
As you prepare to file your taxes, here are the key updates you need to know for the 2024 tax season:
Standard Deduction Increases(1)
- Single Filers: $14,600 (up $750 from 2023)
- Married Filing Jointly: $29,200 (up $1,500)
- Heads of Household: $21,900 (up $1,100)
Adjusted Tax Brackets(2)
- Marginal tax brackets have been adjusted for inflation. For example, the 22% bracket now applies to incomes between $47,151 and $100,525 for single filers.
Retirement Savings Updates(3)
- IRA Contribution Limit: $7,000 (+$1,000 for those 50 and older)
- 401(k) Contribution Limit: $23,000 (+$7,500 catch-up contribution for those 50 and older)
Health Savings Accounts (HSA)(4)
- Individual Coverage: Contribution limit increased to $4,150
- Family Coverage: Contribution limit increased to $8,300
Energy Tax Credits(5)
- Expanded credits for energy-efficient upgrades, including solar panels, energy-efficient windows, and HVAC systems, remain available under the Inflation Reduction Act.
Child Tax Credit 2024 Details
The Child Tax Credit (CTC) continues to provide valuable relief for families, offering up to $2,000 per qualifying child under the age of 17. Here’s what you need to know for the 2024 tax year:(6)
Key Benefits
- Maximum Credit: Families can claim up to $2,000 per eligible child.
- Refundable Portion: If the credit exceeds your tax liability, up to $1,700 may be refundable as the Additional Child Tax Credit (ACTC).
Eligibility Requirements
To qualify for the Child Tax Credit, the following conditions must be met:
- Age: The child must be under 17 years old by the end of 2024.
- Relationship: The child must be your son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant of any of these (e.g., grandchild or niece/nephew).
- Residency: The child must have lived with you for more than half the year.
- Support: The child cannot have provided more than half of their own financial support.
- Citizenship: The child must be a U.S. citizen, U.S. national, or U.S. resident alien.
- Dependency: The child must be claimed as a dependent on your tax return.
Income Phase-Outs
The CTC begins to phase out for higher-income taxpayers:(7)
- Single Filers: Credit starts reducing when your Modified Adjusted Gross Income (MAGI) exceeds $200,000.
- Married Filing Jointly: Phase-out begins at $400,000 MAGI.
- Reduction Rate: For every $1,000 above these thresholds, the credit is reduced by $50.
How to Claim the Credit
To claim the Child Tax Credit:
- Complete Schedule 8812 (Credits for Qualifying Children and Other Dependents).
- Attach it to your Form 1040.
- Ensure each qualifying child has a valid Social Security number by the filing deadline.
Current Tax Brackets and Standard Deduction
Understanding your tax brackets and the standard deduction can help you navigate your 2024 tax return more effectively. Here’s a breakdown of what you need to know:
Standard Deduction for 2024
The standard deduction reduces your taxable income, and for 2024, the IRS has set the following amounts:
- Single Filers: $14,600
- Married Filing Jointly: $29,200
- Married Filing Separately: $14,600
- Head of Household: $21,900
This means if you’re eligible for the standard deduction, these are the amounts that will be subtracted from your gross income, potentially lowering your tax bill.
Tax year 2024 marginal tax bracket for single filers
| Income Range | Tax Rate |
| Up to $11,600 | 10% |
| $11,601 to $47,150 | 12% |
| $47,151 to $100,525 | 22% |
| $100,526 to $191,950 | 24% |
| $191,951 – $243,725 | 32% |
| $243,726 to $609,350 | 35% |
| Over $609,350 | 37% |
Tax year 2024 marginal tax bracket for those married and filing jointly
For those who are married and filing jointly, the federal income tax brackets for 2024 are structured to provide some tax relief for couples, with higher thresholds compared to single filers. Here’s a breakdown of the 2024 tax brackets for married couples filing jointly:
| Income Range | Tax rate |
| Up to $23,200 | 10% |
| $23,201 to $94,300 | 12% |
| $94,301 to $201,050 | 22% |
| $201,051 to $383,900 | 24% |
| $383,901 to $487,450 | 32% |
| $487,451 to $731,200 | 35% |
| Over $731,200 | 37% |
It’s important to understand that these tax rates apply to portions of your income. For example, if your income is $50,000, only the amount above $47,150 would be taxed at the 22% rate, while the rest of your income would be taxed at the lower 12% rate.
By staying aware of these thresholds, you can plan your finances more strategically and make the most of your deductions.
IRA and HSA Limits for 2024 Tax Returns
Maximizing your contributions to retirement and healthcare savings accounts can significantly reduce your taxable income and help you save for the future. Here’s a quick look at the updated contribution limits for IRAs and HSAs in 2024:
IRA Contribution Limits for 2024
For the 2024 tax year, the IRS has increased the contribution limits for both Traditional and Roth IRAs:
- Under Age 50: $7,000
- Age 50 and Older: $8,000 (this includes a $1,000 catch-up contribution)
The $7,000 limit applies to the total contributions made to all of your IRAs, whether Traditional or Roth. The catch-up contribution allows individuals over 50 to contribute more, helping boost retirement savings as they approach retirement age.
Keep in mind that for Traditional IRAs, contributions may be tax-deductible, depending on your income and whether you or your spouse are covered by a workplace retirement plan. Roth IRAs, on the other hand, do not offer a tax deduction, but qualified withdrawals are tax-free in retirement.
HSA Contribution Limits for 2024
Health Savings Accounts (HSAs) are another valuable tool to save on taxes while preparing for medical expenses. For 2024, the contribution limits are:
- Self-Only Coverage: $4,150
- Family Coverage: $8,300
If you’re 55 or older, you can make an additional $1,000 catch-up contribution, raising the contribution limits to:
- Self-Only Coverage: $5,150
- Family Coverage: $9,300
HSAs offer a triple tax advantage: contributions are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free. To contribute to an HSA, you must be enrolled in a High Deductible Health Plan (HDHP).
Current Energy Tax Credit Guidelines For 2024
As part of efforts to reduce environmental impact and promote sustainable living, the federal government continues to offer several tax credits that can make energy-efficient home improvements more affordable. Here’s a look at the key energy tax credits available for 2024 that you can take advantage of:
Residential Clean Energy Credit
The Residential Clean Energy Credit provides a 30% tax credit for a variety of clean energy installations. This includes the cost of equipment and installation, which can significantly reduce the upfront investment needed for renewable energy systems. Eligible upgrades include:
- Solar Panels: You can claim 30% of the total cost of installing solar panels, including both the equipment and labor.
- Solar Water Heaters: If you install a solar water heating system, you can claim 30% of the cost, provided it’s used for residential purposes.
- Wind and Geothermal Systems: For wind turbines and geothermal heat pumps, the credit also covers 30% of the installation costs.
This credit can make it easier for homeowners to transition to renewable energy sources, helping reduce energy bills while benefiting the environment.
Energy Efficient Home Improvement Credit
In addition to renewable energy systems, there are credits for improving the overall energy efficiency of your home. For 2024, eligible home improvements include:
- Insulation: You can claim 30% of the cost of adding or upgrading insulation up to a limit of $1,200.
- Energy-Efficient Windows and Doors: This credit covers 30% of the cost of energy-efficient windows and skylights, with a combined cap of $600.
- Energy-Efficient HVAC Systems: For efficient heating and cooling systems like heat pumps and furnaces, you can claim up to $2,000, depending on the system’s efficiency.
These improvements can reduce your home’s energy usage and lower utility bills while also contributing to a more sustainable living environment.
Electric Vehicle (EV) Tax Credit
For those looking to purchase an electric vehicle (EV), the Clean Vehicle Credit offers significant savings. The credit can be as high as $7,500 for new electric vehicles, depending on the battery capacity and other qualifications. Additionally, there’s a credit of up to $4,000 available for used electric vehicles, subject to certain price limits and model requirements.
This is a great opportunity for those making the switch to an electric vehicle, helping to offset some of the purchase costs while contributing to cleaner transportation.
Estate Tax Exemption for 2024 Returns
For 2024, the federal estate and gift tax exemption has increased to $13.61 million per individual, up from $12.92 million in 2023. This means you can pass on up to $13.61 million during your lifetime or at death without incurring federal estate or gift taxes. For married couples, the exemption is effectively doubled to $27.22 million, allowing both spouses to transfer a significant amount to heirs tax-free.(8)
It’s important to note that this exemption is set to decrease to $7 million per individual in 2026 unless new legislation is enacted. If your estate is near or exceeds the current exemption, it might be worth considering strategies to take advantage of the higher exemption before it potentially drops.
Keep in mind that some states impose their own estate or inheritance taxes, which may have different exemption limits. For instance, New York’s estate tax exemption for 2024 is $6.94 million. So, in addition to federal rules, you’ll need to factor in state-specific regulations when planning your estate.
Given the potential for changes in tax laws, consulting with an estate planning professional is a smart move. They can help ensure that your estate plan aligns with current laws and maximizes the benefits available to you.
Get a Head Start on Your Taxes with Cg Tax, Audit & Advisory
Tax season doesn’t have to be stressful. At CG Tax, Audit & Advisory, we’re committed to helping you navigate the complexities of the 2024 tax year. Our expert team will ensure you take full advantage of deductions, credits, and the latest updates, all while filing your taxes accurately and on time.
Contact us today to get a head start on a smooth, hassle-free tax season.