A Guide to Key Financial Changes in 2024
Each year, we post a one-pager guide to Key Financial Data that all savers should know, such as deadlines, tax brackets, exclusions, deductions, premiums, contribution limits, and more.
Sometimes we see some major changes year-to-year, but there’s nothing too surprising this time around. There were a bunch of inflation adjustments (which were expected) but really the biggest changes are set to take place in 2025, when several provisions of the “Tax Cuts and Jobs Act” are set to expire.
If you are thinking about doing a Roth conversion or any other tax planning, let’s talk this year. There are no big surprises in this data, but there are big planning opportunities.
The IRS made 63 inflation adjustments this year. We won’t be covering them all in this post, but here are some of the highlights:
- Tax brackets and tax rates adjusted for inflation. You can see the new rates here.
- The standard deduction, AMT exemption amounts, income ranges for tax rates on long-term capital gains, retirement contribution limits, income limits for IRAs, and annual limits for health savings accounts all adjusted for inflation.
- Exclusion amounts for the estate, gift, and generation-skipping transfer increased.
- Last year from 2022 to 2023, older Americans experienced a true blue cost-of-living increase—the highest since Reagan! Social Security got a cost-of-living adjustment (COLA) of 8.7% while monthly Medicare premiums went down $10 on average. This is not the case for 2024. Most Americans will get a pay raise this year, but it’s a modest one. The basic Medicare premium increased by 6% while the Social Security benefit raise is 3.2%. No confetti and balloons this year—as we exit the Covid years, we are slowly heading back to normal.
Tax deadlines for 2024
- If you pay estimated quarterly tax, your fourth and final payment for 2023 is due on January 16, 2024.
- Tax Day is April 15, 2024, and it is the last day to make Roth, Traditional IRA, and HSA contributions for 2023. It’s also the last day for 2023 Keogh and SEP contributions unless you extend your tax filing deadline.
- Tax extension deadline: October 15, 2024.
- Estimated quarterly tax deadlines for 2024: April 15 (2024), June 17 (2024), September 16 (2024), January 15 (2025).
- December 31, 2024 is the last day to: pay expenses for itemized deductions, get your tax-loss selling done, open a Keogh plan for 2024, open and fund a solo 401(k) for 2024, contribute to employer-sponsored 401(k) plans, and correct excess contributions to IRAs and qualified plans to avoid penalty.
We didn’t cover every single change here, but we covered the highlights! You can ask your tax professional or CPA for a more comprehensive summary. We also have a printable PDF of the 2024 Key Financial Data. You can access it here.
Several tax reforms may expire in 2025
If the Tax Cuts and Jobs Act of 2017 is not extended, many of the provisions will expire at the end of 2025. Among the expected changes:
- Individual income tax rates will revert to their 2017 levels.
- The standard deduction will be cut roughly in half, the personal exemption will return, and the child tax credit will be reduced.
- The estate tax exemption will be reduced.
- The special 20% tax deduction for pass-through businesses will disappear.
- The cap of $10,000 on state and local income taxes will disappear. Those who are married but file separately may deduct up to $5,000 if they itemize.
We don’t know what the future holds for these reforms, but if you haven’t seen us in a while, call the office. Let’s do a review and look for tax planning opportunities in 2024.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.