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.
- 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.
- 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.
- 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).
- 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).
- Earned Income Tax Credit. The maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers with three or more qualifying children.
- 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).