What to Know for 2024: Changes to income tax brackets, IRA contribution limits, and more

January 22, 2024/Harbor Wealth Management

With the new year, some important tax changes have come into effect. Find out what might change for you in 2024:

 

Income Tax Brackets

  • This table visualizes the marginal tax brackets for the 2024 tax year, showing the different tax rates for individual income and married couples filing jointly at various income levels. (Taken from Axios, data from IRS)
 

Marginal rate

  

Individual income

  

Married couples filing jointly
10% $11,600 or less $23,200 or less
12% $11,601 to $47,150 $23,201 to $94,300
22% $47,151 to $100,525 $94,301 to $201,149
24% $100,526 to $191,950 $201,150 to $383,899
32% $191,951 to $243,725 $383,900 to $487,449
35% $243,726 to $609,349 $487,450 to $731,199
37% $609,350 or more $731,200 or more

 

  • The standard deduction for single taxpayers has increased by $750 to $14,600, while the deduction for married couples filing jointly has increased by $1,500 to $29,200.
  • The standard deduction for heads of households has increased by $1,100 to $21,900.

 

Capital Gains Rates

  • From Fidelity: Long-term capital gains tax rate 2024
Capital gains tax rate Single (taxable income) Married filing separately (taxable income) Head of household (taxable income) Married filing jointly (taxable income)
0% Up to $47,025 Up to $47,025 Up to $63,000 Up to $94,050
15% $47,026 to $518,900 $47,026 to $291,850 $63,001 to $551,350 $94,051 to $583,750
20% Over $518,900 Over $291,850 Over $551,350 Over $583,750

 

 

Retirement Account Contribution Limits

  • In 2024, the 401k, 403b, and 457 contribution limit rises to $23,000, up $500 from 2023.
  • The IRA contribution limit for both traditional and Roth IRAs has also risen by $500—now, you can contribute up to $7,000. If you’re over the age of 50, you can contribute a catch-up contribution of $1,000, making your total possible 2024 contribution $8,000.
    • Good news—if you’re a single-filer making under $161,000, you’re eligible to contribute to a Roth IRA in 2024. In 2023, the income threshold was $153,000.
    • The joint-filing limit has also increased, rising to $240,000 from $228,000.
  • Simple IRAs: In 2024, employees can contribute $16,000, up from $15,500. Catch-up contributions for Simple IRAs have not changed—those 50 and older can contribute an extra $3,500.

 

Gifting Exclusion

  • The annual exclusion for gifts increases to $18,000 from $17,000.
  • In 2024, the lifetime gift and estate tax exclusion rose to $13.61 million from $12.92 million in 2023.
    • Important: In 2025, without action from Congress, the exemption will fall back to $5 million.

 

Mileage Reimbursement Rates

  • In 2024, mileage reimbursement rises to $0.67/mile, up from $0.655 in 2023.

 

Flexible Spending and Health Savings Account Limits

  • In 2024, you can contribute up to $3,200 to an FSA—up from $3,050 in 2023.
  • In 2023, the HSA contribution limit was set at $3,850 for single-filers. In 2024, you can contribute $4,150. For joint filers, you can contribute up to $8,300.
    • HSA users aged 55 and over can contribute an additional $1,000.

 

–Delaney C

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