Some Key Tax Law Adjustments for 2024

Maicher CPA Pllc provides a full range of tax services to individuals and businesses.  Now that the calendar has flipped over into tax year 2024 there are several key tax law changes in effect.  

  1. Social Security/Medicare Tax. The rate of social security tax on taxable wages is 6.2% for the employer and employee. The social security wage base limit is $168,600.  The Medicare tax rate remains unchanged from 2023 at a rate of 1.45% each for the employee and employer.  There is no wage base limit for Medicare tax. 
  2. Standard Deduction.  The standard deduction for married couples filing jointly is $29,200. For single taxpayers and married individuals filing separately, the standard deduction is $14,600, and for heads of households, the standard deduction is $21,900.
  3. Marginal Rates. The top tax rate remains 37% for individual single filers with incomes greater than $609,350 ($731,200 for married couples filing jointly).  The other rates are:
  • 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
  • 32% for incomes over $191,950 ($383,900 for married couples filing jointly)
  • 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
  • 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
  • 12% for incomes over $11,600 ($23,200 for married couples filing jointly)

The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).

  1. Alternative Minimum Tax Exemption. The Alternative Minimum Tax exemption amount is $85,700 and begins to phase out at $609,350 ($133,300 for married couples filing jointly for whom the exemption begins to phase out at $1,218,700). 
  2. Earned Income Tax Credit.  The maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers with three or more qualifying children.
  3. Health Plans/Medical Savings Accounts. Employee salary reductions for contributions to health flexible spending arrangements increase to $3,200. For cafeteria plans, the maximum carryover amount is $640. Participants with self-only coverage in Medical Savings Accounts also can contribute increased amounts compared to 2023 subject to the annual deductible amounts and other conditions.   

Take-away:  Maicher has years of experience preparing tax returns and providing proactive tax planning advice.   Contact us today to strategize about 2024.  

Sources:

IRS Pub. – “Publication 15 – Introductory Material,” (January 10, 2024).

IRS Pub – “IRS provides tax inflation adjustments for tax year 2024,” (November 27, 2023).