2025 Financial Planner Coming Soon
2024 Year End
Tax Updates

What You Need to Know About This Tax Season.
Tax laws are constantly evolving, with the IRS making annual adjustments to reflect changes in the economy and legislation. However, the 2024 tax year has been notably quieter in terms of updates.
For the first time since 2016, no new tax bills have been passed at the federal level. While fewer changes mean less to keep up with, it’s still essential to stay informed about any adjustments that could impact your tax filings.
On this page, you’ll find a concise overview of the key updates for 2024, including adjustments to tax brackets, credits, and deductions. Whether you’re filing as an individual or for your business, this guide will help ensure you’re up-to-date and fully prepared for the upcoming tax season.
Key Takeaways for 2024 Tax Changes
Here’s an overview of notable tax law updates for 2024, which will impact the 2025 tax filing season:
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Higher Tax Bracket Thresholds: Adjusted for inflation, allowing for increased income within each tax bracket.
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Increased Standard Deduction: Providing a larger deduction for taxpayers who do not itemize.
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Higher Retirement Contribution Limits: Allowing individuals to save more in retirement accounts.
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Lower 1099-K Reporting Threshold: Now set at $5,000, impacting reporting for third-party payment transactions.
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Updated EITC and Adoption Credit: Enhanced benefits to support eligible taxpayers.
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Increased Refundable Portion of the Child Tax Credit: Offering more financial support to families.
Changes to Tax Credits and Deductions
In addition to inflation adjustments and the EITC updates this year, other credits will receive expansions and adjustments.
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Child Tax Credit: The refundable portion increased to $1,700.
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Premium Tax Credit: The Inflation Reduction Act is extended through 2025.
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Social Security Tax Limit: For 2024, the maximum earnings subject to the Social Security payroll tax increased to $168,600.
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Electric Vehicle Credit: Starting in 2024, at least 40% of the battery components must come from North America or specified US Trading Partners. The credit can also be advanced at the point of sale and paid directly to the seller, but it will need to be reconciled on the tax return as a non-refundable credit. Any excess advance credit will need to be repaid.
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Alternative Minimum Tax (AMT): The Alternative Minimum Tax exemption amount for single and married filing separate taxpayers is $85,700 for 2024 and begins to phase out at $609,350. The AMT exemption for married filing jointly is $133,300 and begins to phase out at $1,218,700.
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Bonus Depreciation: The bonus depreciation deduction will be 60% in 2024.
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Gift Tax Exclusions: The annual gift tax exclusion increased to $18,000 in 2024, and the lifetime exclusion increased to $13.61 million.
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Qualified Adoption Expenses: The maximum credit for adoption expenses increased to $16,810 for 2024
Adjustments for retirement accounts for 2024
Your clients who contribute to retirement accounts will see several increases this year.
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401(k) contributions: Your clients can contribute up to $23,000 to 401(k) plans. If they are 50 or older, they can contribute up to $30,500.
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IRA contributions: The annual contribution limit for IRAs in 2024 is $7,000. If your clients are 50 or older, they can contribute up to $8,000.
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Health flexible spending accounts: Your clients can contribute up to $3,200 in employee salary reductions to fund their health flexible spending arrangement.
Required Minimum Distributions
Effective January 1, 2024, Required Minimum Distributions are required from all retirement accounts (except ROTH accounts) at the following ages.
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70 ½ if the taxpayer was born before July 1, 1949
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72 if the taxpayer was born July 1, 1949, to December 31, 1950
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73 for any taxpayer born between 1951 and 1959.
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75 for any taxpayer born in 1960 or later.
529 Plans
Effective January 1, 2024, unused funds in 529 Plans are now eligible for a rollover to a ROTH IRA. Here are some guidelines on how your clients can qualify for this rollover.
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Lifetime Limit: Your clients can roll over up to $35,000 in their lifetime.
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Annual Contribution Limit: The amount your clients roll over must be within the annual contribution limit for the Roth IRA. For 2024, the limit is $7,000, or $8,000 for those 50 and older.
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Beneficiary: The Roth IRA must be in the same name as the 529 plan beneficiary.
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Account Age: The 529 plan must have been in existence for at least 15 years.
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Rollover Funds: The funds rolled over must have been in the 529 plan for at least five years.
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Earned Income: The beneficiary must have earned income equal to at least the amount transferred in any year.
Why file early?
Get Your Refund Sooner
Filing your taxes early means you’re one of the first in line for processing, which can help you receive any refund owed to you sooner. For those counting on a tax refund, filing promptly may possibly provide a welcome financial boost.
Reduce the Probability in Risk of Identity Theft
Filing early can also reduce the probability in risk of tax-related identity theft. Submitting your return before scammers might have a chance to file in your name is one way which may help protect your personal information.
Have More Time to Resolve Any Potential Issues
By filing ahead of the deadline, you allow yourself more time to address any questions or issues that may arise, such as verifying deductions or addressing missing documents.
Missed out on tax credits from previous years?
In response to the COVID-19 pandemic, the government passed historic temporary expansions to tax credits for 2021. This means more people were eligible to receive more money during tax time. If you were eligible for 2021 tax credit expansions and didn’t claim them, it’s not too late.
Here are the highlights:
Child Tax Credit (CTC): The 2021 Expanded CTC made the credit available to nearly every family that is raising kids. The expansion:
Increased the amount of the credit to $3,000 per child age 6-17 and $3,600 per child under the age of 6.
Removed the minimum income requirement. This means that even if you don’t have income from a job, you can still get the credit.
Made the credit fully refundable. If you don’t owe any taxes, you can get the full amount as a refund.
Earned Income Tax Credit (EITC): The 2021 Expanded EITC is worth up to $6,728 for workers with children living with them. Significant expansions to the EITC for workers not raising children at home include:
The age of workers eligible to claim this credit changed from 25-64 to include people 19-24 and 65 and older. Additionally, youth experiencing homelessness and former foster youth who are 18 or older are eligible.
The credit amount is nearly tripled to $1,502. Additionally, there is a ‘lookback’ rule for the EITC that allows anyone eligible for the credit to choose to use their earnings from 2019 instead of 2021, if it can help you get a larger credit.
Child and Dependent Care Credit (CDCTC): Key changes to this credit for tax year 2021 only include:
The credit is fully refundable. This means that the credit can provide you with a tax refund even if you don’t owe taxes.
The credit is worth up to $4,000 for one qualifying person or up to $8,000 for two or more qualifying persons.
The amount of qualified expenses increased to up to $8,000 for one qualifying person and up to $16,000 for two or more qualifying persons.
Stimulus payments: Congress approved 3 rounds of stimulus payments for continued COVID relief. While the deadline for the first two stimulus checks was May 17, 2024, it’s not too late to claim the third stimulus payment. You will need to file a 2021 tax return and claim the Recovery
Rebate Credit for the third stimulus check.
Didn’t get some of these credits that you think you may be eligible for? Don’t worry! You can still claim them when you file a prior year tax return.
Since you have up to 3 years to file prior year taxes, you must file a 2021 federal tax return by April 18, 2025. This is the last year to file a 2021 tax return, and you must mail it to the IRS. You cannot file your 2021 tax return electronically.
If you were not required to file a tax return, there is no penalty for filing taxes after the original April deadline. If you were required to file taxes, and you missed the deadline, filing late (and claiming credits you are eligible for) could decrease the penalty amount you may owe.