2024 New Income Tax Updates
For your information only. We are not lawyers. We do not give legal advice. We do not make any guarantees for any income tax return.
STANDARD DEDUCTION INCREASED
The standard deduction has increased for 2023 for ALL filing statuses;
Married Filing Joint OR Qualifying Widow $27,700
Married Filing Separate OR Single $13,850 Head of Household $20,800
AMT EXEMPTION INCREASE
The AMT exemption amount has been increased to $81,300 ($126,500 MFJ). The income level at which the AMT exemption begins to phase out has increased to $578,150 ($1,156,300 MFJ).
CLEAN VEHICLE CREDIT
- If you purchased an electric vehicle most of the changes under the Inflation Reduction Act are effective with electric vehicles purchased starting January 1, 2023. This dollar-for-dollar credit can reduce taxes you may owe by up to $7,500. As of August, 17, 2022 new electric vehicles must receive final assembly in North America. For the first time, beginning in tax year 2023, if you purchased a used electric vehicle, you may be eligible for a tax credit up to the lesser of $4,000 or 30% of the sales price.
1099K FORMS
The IRS has again delayed the new thresholds for 2023 TY. On November 21, 2023, the IRS announced another delay in reporting thresholds for third-party settlement organizations (TPSOs). As a result of this delay, TPSOs will not be required to report tax year 2023 transactions on a Form 1099-K to the IRS or the payee for the lower, over $600 threshold amount enacted as part of the American Rescue Plan of 2021. This means that for tax year 2023 (the taxes you file in 2024) the existing 1099-K reporting threshold of the aggregate of more than $20,000 in payments from over 200 transactions will remain in effect. The IRS is currently planning for a threshold of $5,000 for tax year 2024 (the taxes you file in 2025) as part of the phase in to implement the lower over $600 threshold enacted under the American Rescue Plan.
EIC (EARNED INCOME CREDIT)
For tax year 2023, this tax credit is worth up to $7,430 for a family with three kids. Tax filers with no kids must be at least age 25 but under age 65 to claim the credit.
FOREIGN INCOME TAX EXCLUSION
For tax year 2024, the foreign earned income exclusion is $120,000.
STUDENT LOAN INTEREST
The payment pause ended on September 1, 2023, so there will be student loan interest deductions up to $2,500.
TAX BRACKET INCREASE
For 2023, the tax brackets for individual income tax increased as follows:
37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly)
35% for incomes over $231,250 ($462,500 for married couples filing jointly);
32% for incomes over $182,100 ($364,200 for married couples filing jointly);
24% for incomes over $95,375 ($190,750 for married couples filing jointly);
22% for incomes over $44,725 ($89,450 for married couples filing jointly);
12% for incomes over $11,000 ($22,000 for married couples filing jointly).
10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).
