Is a Tax Break in Your Future?

• 3 min read

nflation-adjusted tax brackets and higher standard deduction in 2024.
Consider the inflation-adjusted tax brackets and higher standard deductions in 2024.

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nflation-adjusted tax brackets and higher standard deduction in 2024.

Now that the Internal Revenue Service (IRS) has released information for 2024 on income tax thresholds, standard deductions, and other brackets, there’s still time to compare your financial planning options for this year and next.

The IRS’s inflation adjustment means more of your income could fall into a lower tax bracket, and you may wish to consider some tax-shifting strategies.

Examples Of Tax-Year Shifting Strategies

  • Depending on your expected income for the coming year, you may decide to defer income by having year-end bonuses or deferred compensation awards paid in 2024.
  • Consider whether to harvest capital losses in investment accounts to offset any capital gains and perhaps even create a tax-loss carryforward for future years.
  • You could pre-pay property tax bills for 2024 in this calendar year to increase 2023 deductions.
  • Consider bunching future planned charitable contributions in this calendar year by making a lump-sum gift to a donor-advised fund.
  • “Superfund” a 529 plan to educate children or grandchildren by pulling forward the next five years of contributions into this calendar year.
  • Take advantage of new 2023 tax credits before year-end by investing in clean energy projects around the home or buying a new or used electric vehicle.
  • Utilize the current historically high lifetime estate and gift exemption to your estate planning advantage before it potentially reverts to a lower amount after 2025.

Contribution, Threshold and Exemption Amounts

The following tables, sourced from the IRS, include helpful information on deferred accounts and exemptions that we find clients ask for frequently.

Federal Income Tax Brackets: 2023-2024

TAX RATESINGLEHEADS OF HOUSEHOLDMARRIED FILING JOINTLY
202320242023202420232024
37%$578,125 or more$609,350 or more$578,100 or more$609,350 or more$693,750 or more$731,200 or more
35%Over $231,250 but not over $578,125Over $243,725 but not over $609,350Over $231,250 but not over $578,100Over $243,700 but not over $609,350Over $462,500 but not over $693,750Over $487,450 but not over $731,200
32%Over $182,100 but not over $231,250Over $191,950 but not over $243,725Over $182,100 but not over $231,250Over $191,950 but not over $243,700Over $364,200 but not over $462,500Over $383,900 but not over $487,450
24%Over $95,375 but not over $182,100Over $100,525 but not over $191,950Over $95,350 but not over $182,100Over $100,500 but not over $191,950Over $190,750 but not over $364,200Over $201,050 but not over $383,900
22%Over $44,725 but not over $95,375Over $47,150 but not over $100,525Over $59,850 but not over $95,350Over $63,100 but not over $100,500Over $89,450 but not over $190,750Over $94,300 but not over $201,050
12%Over $11,000 but not over $44,725Over $11,600 but not over $47,150Over $15,700 but not over $59,850Over $16,550 but not over $63,100Over $22,000 but not over $89,450Over $23,200 but not over $94,300
10%Not over $11,000Not over $11,600Not over $15,700Not over $16,550Not over $22,000Not over $23,200


Individual Retirement Account (IRA) and Retirement Plan Contribution Limits: 2023-2024

RETIREMENT PLANAMOUNT OF ANNUAL CONTRIBUTIONS/ELECTIVE DEFERRALSCATCH-UP CONTRIBUTIONS
(if attain age 50 by end of year)
2023202420232024
IRAs—Traditional & Roth$6,500$7,000$1,000$1,000
401(k)$22,500$23,000$7,500, if plan allows$7,500, if plan allows
SIMPLE$15,500$16,000$3,500, if plan allows$3,500, if plan allows


Individual Retirement Account (IRA) and Retirement Plan Deadlines: 2023-2024

RETIREMENT PLANESTABLISHMENT DATEFUNDING DATE
IRAs—Traditional & RothBy date that income tax returns are filed, no later than April 15By date that income tax returns are filed, no later than April 15
Simplified Employee Pension (SEP)By date that income tax returns are filed, including time of extensionBy date that income tax returns are due, including time of extension
SIMPLEBy October 1 of current tax yearBy date that income tax returns are due, including time of extension
Self-employed retirement plans (defined benefit and solo 401(k) plans)By date that income tax returns are filed, including time of extensionBy date that income tax returns are due, including time of extension


Federal Tax Threshold Amounts and Standard Deductions: 2023-2024

FILING STATUSSINGLEMARRIED FILING JOINTLYTRUSTS & ESTATES
202320242023202420232024
37% Ordinary Income Rate*$578,125$609,350$693,750$731,200$14,450$15,200
20% Long-term Capital Gain Rate*$492,300$518,900$553,850$583,750$14,650$15,450
0% Long-term Capital Gain Rate*$44,625$47,025$89,250$94,050$3,000$3,150
3.8% Medicare Surtax**$200,000$200,000$250,000$250,000$14,450$15,200
0.9% Medicare Contribution Tax***$200,000$200,000$250,000$250,000N/AN/A
Standard Deduction$13,850$14,600$27,700$29,200N/AN/A
Additional Deduction if Age 65 or Blind$1,850$1,950$1,500$1,550N/AN/A
199A (Qualified Business In-come Deduction) Threshold Limit$182,100$191,950$364,200$383,900$182,100$191,950
199A (Qualified Business Income Deduction) Threshold Limit Phased Out$232,100$241,950$464,200$483,900$232,100$241,950
*Based on taxable income; inflation adjusted annually.
**Based on modified AGI (AGI plus net foreign earned income exclusion); not inflation adjusted.
***Based on earned income; not inflation adjusted.


Alternative Minimum Tax Exemptions (AMT) and Rates: 2023-2024

AMT EXEMPTIONAMT RATE ON AMT INCOME
Filing Status20232023 Phase-Out20242024 Phase-OutRate20232024
Single$81,300$578,150 – $903,350$85,700$609,350 – $952,15026%Up to $220,700Up to $232,600
Married Filing Jointly$126,500$1,156,300 – $1,662,300$133,300$1,218,700 – $1,751,90028%Over $220,700Over $232,600


Kiddie Tax Threshold: 2023-2024

20232024
No Tax on Initial Level of Unearned Income Up to$1,250$1,300
Tax at Child’s Rate on Next Level of Unearned Income$1,250$1,300
Total Kiddie Tax Threshold$2,500$2,600


Federal Estate, Gift, and GST Exemptions: 2023-2024

20232024
Annual Gift Tax ExclusionLifetime Gift Tax ExemptionEstate Tax ExemptionGST Tax ExemptionAnnual Gift Tax ExclusionLifetime Gift Tax ExemptionEstate Tax ExemptionGST Tax Exemption
$17,000$12.92 million$12.92 million$12.92 million$18,000$13.61 million$13.61 million$13.61 million


Health Account Contribution Limits: 2023-2024

TYPE OF ACCOUNT20232024
Flexible Spending Account (FSA)$3,050$3,200
Health Savings Account (HSA)—Individual$3,850$4,150
Health Savings Account (HSA)—Family$7,750$8,300
HSA Additional Contributions for those age 55+$1,000$1,000


Long-Term Care Insurance—Eligible Premium Amounts: 2023-2024

POLICYHOLDER’S AGE20232024
Age 40 or younger$480$470
Age 41 to age 50$890$880
Age 51 to age 60$1,790$1,760
Age 61 to age 70$4,770$4,710
Age 71 or older$5,960$5,880


Charitable Contribution Deductions: 2023-2024

PUBLIC CHARITIESPRIVATE FOUNDATIONS
Cash Donations60% of AGI limitation (50% before Tax Cut and Jobs Act of 2017)30% of AGI limitation
Appreciated Property DonationsFair market value (FMV) of long-term capital gain property is deductible only up to 30% of AGI limitationBasis of long-term capital gain property is deductible only up to 20% of AGI limitation. FMV deduction for publicly traded stock


Plan to Your Unique Circumstances

At AMG, we plan comprehensively, counseling each client on their unique circumstances, needs, and desires. Because of the clarity gained through our proprietary Financial Security Analysis, integrated tax projections and cash flow analyses, clients can make prompt and informed decisions and know that AMG can implement them with confidence.

HOW AMG CAN HELP

Not a client? Find out more about AMG’s Personal Financial Management (PFM) or to book a free consultation call 303-486-1475 or email us the best day and time to reach you.

This information is for general information use only. It is not tailored to any specific situation, is not intended to be investment, tax, financial, legal, or other advice and should not be relied on as such. AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.

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