As you make your plans for the coming year, it’s important to take note of the changes in contribution limits and other tax changes in 2024. The information that follows was gathered from the IRS and other relevant government agencies.
Social Security
Social Security payments will increase 3.2% in 2024.
401(k)
I view 401(k) plans as a high priority — especially if your employer does contribution matching. For the under-50 crowd, you can contribute $23,000 this year – a $500 increase. If you’re 50 or older, you can also use the catch-up contribution which will be $7,500 – same as 2023. The same rules apply to 403(b) plans, Thrift Savings Plans and most 457 plans.
IRA
For both traditional and Roth IRAs, contribution limits will be $7,000 – up $500. Catch-up contributions for those 50 and older remain unchanged at $1,000. (In addition, the income cutoff for IRA tax deductions has increased. For example, the tax deduction eligibility of traditional IRAs is now phased out over the $77,000 to $87,000 range for joint filers.)
Tax Rates
Marginal tax rates remain unchanged in 2024. The dollar thresholds for particular brackets have increased due to inflation. Here are the rates for single and married joint filers for 2024. (That is, for income earned in 2024 which will be taxed in 2025.)
- 37% for incomes over $609,351 (over $731,201 for married couples filing jointly)
- 35% for incomes over $243,726 (over $487,451 for married couples filing jointly)
- 32% for incomes over $191,951 (over $383,901 for married couples filing jointly)
- 24% for incomes over $100,526 (over $201,051 for married couples filing jointly)
- 22% for incomes over $47,151 (over $94,301 for married couples filing jointly)
- 12% for incomes over $11,601 (over $23,221 for married couples filing jointly)
- 10% for incomes of $11,600 or less ($23,220 or less for married couples filing jointly)
Standard Deduction
The standard deduction for those who do not itemize increased to $14,600 for singles filers and $29,200 for married couples filing a joint return.
Estate Taxes
Estates will be exempt from Federal taxes up to $13,610,000. The limit in 2023 was from $12,920,000.
Required Minimum Distributions
Required Minimum Distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year. You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA and retirement plan accounts when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022).
Account owners in a workplace retirement plan (for example, 401(k) or profit-sharing plan) can delay taking their RMDs until the year they retire, unless they’re a 5% owner of the business sponsoring the plan.
Roth IRAs do not require withdrawals until after the death of the owner. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. You must still take RMDs from designated Roth accounts for 2023, including those with a required beginning date of April 1, 2024.
Naturally there are other changes in the tax laws and there are a lot of details as to what applies to whom. So, if you’d like to discuss how the 2024 tax rules affect your situation, or any other financial matters, we can discuss this in a no-charge, no-obligation initial meeting. Please visit our website or give us a call at 970.419.8212 to set up an in-person or virtual meeting.
This article is for informational purposes only. This website does not provide tax or investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Please consult your tax or investment advisor for specific advice.