As the end of the 2023 calendar year grows near, many individuals begin to reflect on this past year in efforts to prepare for the 2024 New Year. As of November 9th, 2023, the IRS released their annual inflation adjustments for the 2024 tax year (2025 filing year). As year-end tax planning approaches, understanding these key changes could help taxpayers comprehend where they stand for the upcoming 2024 tax year and allow plenty of time to make necessary adjustments to maximize potential tax saving opportunities. Let us take a look at the upcoming adjustments. 

Changes in Personal Income Tax Brackets & Tax Rates

The chart below displays the new 2024 income levels matched to their tax bracket. All 7 tax rate percentages remain the same. 

Increase in Standard Deductions

For 2024, the Standard Deduction amounts have increased for each of the following filing categories: 

The additional standard deduction amount for the aged and blind is $1,550 & $1,950 for unmarried taxpayers. The standard deduction for an individual who may be claimed as a dependent by another taxpayer cannot surpass the greater of $1,300 or the sum of $450 and the individual’s earned income. (Not to exceed the regular standard deduction amounts). 

Alternative Minimum Tax (AMT)

The AMT exemption amounts for the 2024 tax year are:

Tax Credits & Deductions



The adjusted changes for the following 2024 tax credits and deductions are:

• Child Tax Credit – the inflation adjustment increases the refundable portion of the Child Tax Credit to $1,700 ($100 increase) There is currently a lot of discussion in Congress as to future changes of this credit but no actions have been put in place.
• Earned Income Credit – The maximum amount available to qualifying taxpayers with no children is $632, for those with one child is $4,213; for taxpayers with two children is $6,960, and for taxpayers with 3 or more children is $7,830. Income phaseouts do apply.
• Adoption Assistance Credit – The credit allowed for an adoption of a child with special needs is $16,810, which phase outs for taxpayers with MAGI in excess of $252,150 and is completely phased out at $292,150 or more. 

• Medical and Dental Expenses – The floor for medical and dental expenses is 7.5%. In other words, taxpayers can only deduct expenses which exceed 7.5% of their AGI.
• Charitable Donations – The limit for charitable cash donations remains at 60%. 
• Educator Deduction – The deduction amount that eligible educators can claim for books, supplies, computer equipment and other supplies is $300.
• Health Flexible Spending Arrangements – The dollar limitation for employee salary reductions for contributions to a health flexible spending arrangement increases to $3,200. The maximum carryover is $640 for cafeteria plans that permit the carryover of unused amounts.
• Foreign Earned Income Exclusion – The foreign earned income exclusion amount is $126,500.

• Medical Savings Accounts (MSA) –

o  For participants who have self-only coverage in a MSA, the plan must have an annual deductible not less than $2,800 but not more than $4,150.

o  Self-only coverage maximum out-of-pocket expense amount is $5,550.

o  For participants with family coverage, the new annual deductible is $5,550 and the deductible cannot be more than $8,350. For the family coverage, the out-of-pocket expense limit is $10,200.

Federal Estate Tax Unified Credit – Estates of decedents who pass away during 2024 have a basic exclusion of $13.61 million, up from $12.92 million in 2023.

Limits to Personal Gifts – The 2024 annual exclusion for gifts increases to $18,000, compared to the $17,000 in 2023. If gifts are split between spouses, then the total amount that can be gifted is $36,000. 

Retirement Accounts

401(K), 403(b), 457 Plans - Contribution limits for these popular retirement savings accounts will rise to $23,000 (up $500). Likewise, the catch-up contribution limit for individuals aged 50 and over is an additional $7,500.

SIMPLE Retirement Accounts – The contribution limit for individuals with this type of account has increased to $16,000 (up $500 from 2023). The catch-up limit remains the same at an additional $3,500.

Traditional IRA – Contribution limits to an IRA increase to $7,000 (up $500) with an additional $1,000 catch-up amount allowed for those aged 50 and over. 

When a taxpayer meets certain conditions, their contributions to a Traditional IRA are deductible on their tax return. These conditions include filing status, AGI limits, and whether the taxpayer and/or spouse are covered by a workplace retirement plan. For 2024, the phase-out AGI limits were increased as follows: 

• Single Taxpayers covered by a workplace retirement plan – phase out range is increased to between $77,000 and $87,000, up $4,000 from last year.
• Married Filing Jointly

o  For the spouse making the IRA contribution and is covered by the workplace retirement plan, the phase-out ranges are increased to between $123,000 and $143,000. (Up $7,000 from 2023)

o  For the spouse that is married to someone who is covered by a workplace retirement plan, the phase-out ranges increase to between $230,000 and $240,000. (Up $12,000 from 2023)

• Married Filing Separately – the phase-out range is not subject to an annual cost of living adjustment and remains between $0 and $10,000.

Roth IRA – The income phase-out range for taxpayers making contributions to a Roth IRA have increased as follows:

• Single and Head of Household – between $146,000 and $161,000
• Married Filing Jointly - $230,000 and $240,000
• Married Filing Separately – The phase-out range is not subject to annual cost-of-living adjustments and remains between $0 and $10,000

Social Security Wages

The Social Security Administration recently announced that the maximum earnings subject to social security tax will increase from $160,200 to $168,600 in 2024. This will be an increase of $8,400 from 2023. The maximum social security employer contribution will increase by $520.80 in 2024.

The FICA tax rate for both employers and employees is 7.65%. (6.2% for OASDI and 1.45% for Medicare)

Also, for 2024, an employer must withhold 6.2% Social Security tax on the first $168,600 of employee wages, plus 1.45% Medicare tax on the first $200,000 of employee wages, plus 2.35% Medicare tax on all employee wages in excess of $200,000.

Social Security and Supplemental Security Income (SSI) benefits will increase by 3.2% in 2024. The amount of earnings required in order to be credited with a quarter of Social Security coverage will increase from $1,640 to $1,730. 

Let us help you prepare for next year!



These adjustments are some of the many tax provisions modified for the 2024 tax year. With an ever-changing economy, knowing your tax options is highly important. If you would like a more in-depth discussion as to how these or any other tax provisions may affect you, feel free to contact our office. We are always ready to help assist our clients develop a sound tax plan for the future!

GRIFFING & COMPANY, P.C.

One Sugar Creek Center Blvd., Suite 650

Sugar Land, TX 77478

(281) 491-8866 Fax (281) 491-8998

info@griffing.com

www.griffing.com