As the year winds to a close, there are some significant tax rules coming into effect in January 2024 that are likely to affect your federal tax return. Staying on top of these changes can feel like a full-time job. Fortunately, EP Wealth Advisors is here to help.
We monitor federal tax law changes and adjustments to create custom tax planning solutions for clients nationwide. Our team can potentially help you with strategies for credits, save for the future, and possibly reduce your tax liability next year.
2024 Tax Law Changes: Key Highlights
There are several upcoming tax changes that are likely to impact taxpayers. Here we highlight some of the most significant updates.
In 2024, the IRS will increase tax brackets to account for inflation, including increasing specific dollar amounts for each bracket. Review the latest information from the IRS here.
The IRS is also increasing standard deduction amounts for 2024 for single filers, married couples filing jointly, and heads of households. This will impact the nearly 9 in 10 taxpayers who do not itemize their taxes.
When it comes to retirement planning, the IRS has adjusted its contribution limits for 401(k)s, IRAs, and other retirement accounts for 2024. 401(k) and IRA contribution limits will increase by $500 next year. The catch-up contribution for IRAs will also increase to $1,000, allowing people over 50 to save more for retirement.
Although capital gains rates will not change next year, the brackets for capital gain rates have been updated for 2024. The maximum 15% rate amount for individuals is expected to be $518,900 and $583,750 for married taxpayers filing jointly and surviving spouses.
EV / Clean Vehicle Tax Credit
The Inflation Reduction Act includes a provision for a tax credit that can benefit consumers looking to buy a new or used clean vehicle next year. The law is part of the nation’s most comprehensive effort to address climate change to date.
Under the Inflation Reduction Act, consumers can transfer a new clean vehicle credit of up to $7,500 or a previously owned clean vehicle credit of up to $4,000 to a car dealership starting on January 1, 2024. This lowers the cost of purchasing a vehicle by giving buyers an up-front down payment at the point of sale. Registered dealers can either reduce the overall cost of the vehicle, or provide cash directly to the buyer.
This is just a snapshot of the many changes coming next year. Instead of trying to navigate them on your own, leave your 2024 tax planning to the team at EP Wealth. We can help you identify the changes that may impact you. Call or connect online to find out how we can potentially help you reach your financial goals.