IRS Announces 2024 Tax Inflation Adjustments
New for 2024: Hazardous Substance Superfund Reinstated
In calendar year 2023, the IRS said, the Inflation Reduction Act reinstates the Hazardous Substance Superfund financing rate for crude oil received at a United States refinery and petroleum products that are entered into the U.S. for consumption, use or warehousing. The tax rate is the sum of the Hazardous Substance Superfund rate and the Oil Spill Liability Trust Fund financing rate.
For calendar years beginning in 2024, the Hazardous Substance Superfund financing rate is adjusted for inflation. Crude oil or petroleum products entered after December 31, 2016, will have a tax rate of $0.26 cents a barrel for the 2024 calendar year.
2024 Income Rate Brackets
| Tax Rare | Married Individuals Filing Joint Returns and Surviving Spouses | Married Individuals Filing Separate Returns | Head of Households | Single Taxpayers (other than Surviving Spouses and Heads of Households) |
|---|---|---|---|---|
| 10% | $23,200 and under | $11,600 and under | $16,550 and under | $11,600 and under |
| 12% | Over $23,200 | Over $11,600 | Over $16,550 | Over $11,600 |
| 22% | Over $94,300 | Over $47,150 | Over $63,100 | Over $47,150 |
| 24% | Over $201,050 | Over $100,525 | Over $100,500 | Over $100,525 |
| 32% | Over $383,900 | Over $191,950 | Over $191,950 | Over $191,950 |
| 35% | Over $487,450 | Over $243,725 | Over $243,700 | Over $243,725 |
| 37% | Over $731,200 | Over $365,600 | Over $609,350 | Over $609,350 |
Estates and Trusts
| If Taxable Income Is | The Tax is |
|---|---|
| $3,100 and under | 10% of the taxable income |
| Over $3,100 | $310 plus 24% of the excess over $3,100 |
| Over $11,150 | $2,242 plus 35% of the excess over $11,150 |
| Over $15,200 | $3,659.50 plus 37% of the excess over $15,200 |
Standard Deduction
| Filing Status | Standard Deduction |
|---|---|
| Married Individuals Filing Joint Returns and Surviving Spouses | $29,200 |
| Heads of Households | $21,900 |
| Unmarried Individuals (other than Surviving Spouses and Heads of Households) | $14,600 |
| Married Individuals Filing Separate Returns | $14,600 |
Alternative Minimum Tax (AMT) Rate Change
| Filing Status | Exemption Amount | Threshold Phaseout Amount | Complete Phaseout Amount |
|---|---|---|---|
| Joint Returns or Surviving Spouses | $133,300 | $1,218,700 | $1,751,900 |
| Unmarried Individuals (other than Surviving Spouses) | $85,700 | $609,350 | $952,150 |
| Single Taxpayers Filing Separate Returns | $66,650 | $609,350 | $875,950 |
| Estates and Trusts | $29,900 | $99,700 | $219,300 |
Earned Income Tax Credit (EITC) Changes
| Item | None | One child | Two children | Three or more children |
|---|---|---|---|---|
| Earned Income Amount | $8,260 | $12,390 | $17,400 | $17,400 |
| Max Amount of Credit | $632 | $4,213 | $6,960 | $7,830 |
| Threshold Phaseout Amount (Married Filing Jointly) | $17,250 | $29,640 | $29,640 | $29,640 |
| Completed Phaseout Amount (Married Filing Jointly) | $25,511 | $56,004 | $62,688 | $66,819 |
| Threshold Phaseout Amount (All other filing statuses) | $10,330 | $22,720 | $22,720 | $22,720 |
| Completed Phaseout Amount (All other filing statuses) | $18,591 | $49,084 | $55,768 | $59,899 |
Maximum Capital Gains Tax Rates
| Filing Status | Max Zero Rate Amount | Max 15% Rate Amount |
|---|---|---|
| Married Individuals Filing Joint Returns and Surviving Spouse | $94,050 | $583,750 |
| Married Individuals Filing Separate Returns | $47,025 | $291,850 |
| Heads of Household | $63,000 | $551,350 |
| All Other Individuals | $47,025 | $518,900 |
| Estates and Trusts | $3,150 | $15,450 |
Qualified Transportation Fringe Benefits: The monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking for the 2024 tax year has increased to $315, which is a $15 increase from the limit for 2023.
Cafeteria Plans: The dollar limitation on voluntary employee salary reductions for contributions to health flexible spending arrangements has increased to $3,200. The maximum carryover is $640 if the cafeteria plan permits carryover of unused amounts.
Medical Savings Account: For participant who have self-only coverage, the plan must be a high deductible with an annual deductible of at least $2,800 (a $150 increase) and not more than $4,150 (a $200 increase from the previous year). The maximum out-of-pocket expense is $5,550 (a $250 increase from 2023). For family coverage, the high deductible must have an annual deductible of not less than $5,550 (a $200 increase) and no more than $8,350 (a $450 increase from 2023). The out-of-pocket expense limit for family coverage is $10,200, which is an increase of $550 from last year.
Foreign Earned Income Exclusion: The exclusion amount is $126,500, which increased from $120,000 from 2023.
Unified Estate Tax: The basic exclusion amount for decedents who die in 2024 is $13,610,00, which increased from $12,920,000 in 2023.
Adoption Credit: For taxable years beginning in 2024, the amount of qualified adoptions expenses is up to $16,810, which increased from $15,950 in 2023.
Items not affected by indexing: Items that were indexed for inflation in the past are currently not adjusted. This includes:
- The personal exemption for tax year 2024 remains at 0, as it was for 2023.
- For 2024, there is no limitation in itemized deductions as that limitation was eliminated by the Tax Cuts and Jobs Act.
- The modified adjusted gross income amount used by taxpayers to determine the reduction in the Lifetime Learning Credit provided in ยง 25A(d)(2) is not adjusted for inflation for taxable years beginning after Dec. 31, 2020. The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000.
If you have any questions on the IRS tax inflation adjustments for 2024, please contact your Brown Plus advisor.