There are several IRS (IRS) tax thresholds that will be changing in 2024. These changes are made to adjust for inflation (where mandated) and to ensure that taxpayers are paying the correct amount of taxes.
The following are some of the likely changes that will take place in 2024 to key federal (IRS) tax related thresholds:
- The standard deduction for married couples filing jointly will increase to $27,700.
- The standard deduction for single taxpayers and married individuals filing separately will increase to $13,850.
- The standard deduction for heads of households will increase to $20,800.
- The child tax credit will increase to $3,000 per child.
- The dependent care credit will increase to $2,800 for one dependent and $5,600 for two or more dependents.
- The Earned Income Tax Credit (EITC) will increase for all income levels.
These are just estimates and forecasts to date based on available information. Final figures will be published later this year by the IRS
Standard Deduction
The standard deduction is a dollar amount that taxpayers can subtract from their taxable income. This can help to reduce the amount of taxes that they owe. The standard deduction is different for married couples filing jointly, single taxpayers, and heads of households.
In 2023, the standard deduction for married couples filing jointly is $25,100. For single taxpayers and married individuals filing separately, the standard deduction is $12,550. For heads of households, the standard deduction is $18,600.
In 2024, the standard deduction for married couples filing jointly will increase to $27,700. For single taxpayers and married individuals filing separately, the standard deduction will increase to $13,850. For heads of households, the standard deduction will increase to $20,800.
Child Tax Credit
The child tax credit is a tax credit that taxpayers can claim for each of their children. The amount of the credit is based on the child’s age. In 2023, the child tax credit is $2,000 per child.
In 2024, the child tax credit will increase to $3,000 per child. This means that taxpayers will be able to claim a larger tax credit for each of their children.
Dependent Care Credit
The dependent care credit is a tax credit that taxpayers can claim for the cost of childcare. The amount of the credit is based on the amount of money that the taxpayer spends on childcare and their income. In 2023, the dependent care credit is up to $2,000 for one dependent and $4,000 for two or more dependents.
In 2024, the dependent care credit will increase to $2,800 for one dependent and $5,600 for two or more dependents. This means that taxpayers will be able to claim a larger tax credit for the cost of childcare.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable tax credit that is available to low- and moderate-income workers. The amount of the credit is based on the worker’s income and their family size. In 2023, the EITC is up to $6,728 for workers with one child and up to $12,600 for workers with two or more children.
In 2024, the EITC will increase for all income levels. This means that more workers will be eligible for the credit and that those who are already eligible will receive a larger credit.
Other Changes
In addition to the changes that have been mentioned above, there are a number of other changes that will be taking place in 2024. These include:
- The estate tax exemption will increase to $11.7 million.
- The gift tax exemption will increase to $11.7 million.
- The capital gains tax rates will remain the same.
- The Medicare tax rate will increase from 2.9% to 3.05%.