What to Note for 2024

At the top of the list are numerous upward inflation adjustments that affect everything from retirement and estate planning to personal and corporate income tax brackets. We highlight common adjustments here. You can find further details throughout this online guide.

Social Security

On the positive side, Social Security and Supplemental Security Income (SSI) benefits for more than 71 million Americans have increased 3.2 % for 2024. The average Social Security payment will increase more than $50 per month. In addition, while not a tax, the standard monthly premium for Medicare Part B enrollees is $174.70 for 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries will be $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023. Less positive news for higher-income taxpayers, the maximum earnings subject to the Social Security tax has increased to $168,600 for 2024, up from $160,200 in 2023.

Self-employed individuals can deduct the employer half of the 15.3% Social Security and Medicare tax in figuring their adjusted gross income. This deduction only affects your income tax. It doesn’t affect your net earnings from self-employment or your self-employment tax.

Deductions, Credits, Brackets and Limits Rise

A few of the highlights for tax year 2024 includes a $1,500 increase in the standard deduction to $29,200, an increase in all marginal tax brackets (where rates remain the same), and a bump up in the foreign earned income exclusion to $126,500, an increase of $6,500 from 2023. Also, the federal estate tax exclusion amount increased to $13.61 million ($27.22 million if married), while the annual exclusion for gifts rises to $18,000 for calendar year 2024, up from $17,000 for calendar year 2023.

Retirement Plan Limits Increase

Most retirement plan limits increased for 2024. For example, the limit on IRA contributions jumped from $6,500 in 2023 to $7,000 in 2024, while limits for employee contributions made to 401(k) plans, 403(b) plans, and 457 plans increased to $23,000 from $22,500 in 2023, subject to plan documents and a variety of federal tax rules and restrictions.

Required Minimum Distributions (RMDs) Start at Age 73

The age at which you must begin taking required minimum distributions is now 73, increasing to age 75 in 2033. All RMDs must be distributed by December 31 each year. Failure to do so results in a 50% penalty on the required amount not taken.

No RMDs for Roth 401(k) Distributions

Beginning in 2024, Roth 401(k) distributions don’t have the same required minimum distribution requirements as other non-Roth accounts. This may be attractive to you if you’ve planned well for retirement and want to delay withdrawals past age 73 (or 75 in 2033 and later).

A 529-Plan-to-Roth IRA Transfer Option

Starting in 2024, excess 529 funds can be rolled over tax-free to a Roth IRA for the account’s beneficiary. There’s a $35,000 cap. Rollover amounts can’t exceed the annual contribution limit for Roth IRAs. And the 529 plan must have been open for at least 15 years before you can do a 529-to-Roth IRA transfer.

Teachers and Educators

Teachers can use the educator expense deduction to deduct up to $300 ($600 for a married couple) in qualified unreimbursed education expenses, including certain health protection items, from 2024 income. You don’t need to itemize to deduct these expenses.

Student Loans

New for 2024, employers can offer 401(k) plan matches conditioned on student loan repayments made by employees. Check with your employer. Also, most student loan debt forgiven in 2021 through 2025 is nontaxable for federal tax purposes.

ABLE Accounts

Achieving a Better Life Experience (ABLE) accounts help people with disabilities save and pay for disability-related expenses. Now through 2025, eligible individuals can roll over money from a qualified 529 plan into their ABLE account. In 2024, the annual contribution limit is $18,000.

Clean Vehicle Credit

Starting in 2024, dealers may apply the applicable credit directly to your purchase price of a qualifying vehicle, making a purchase easier.