Historically, the IRS makes inflation adjustments to certain federal income tax brackets, credits, and limitations every year. Below is a summary of some of the more significant changes for 2024. For purposes of this article, only amounts that have been adjusted from 2023 to 2024 will be referenced. Items that remained the same will not be shown.
In addition, on December 14, 2023, the IRS published the standard mileage rates for 2024 as follows:
67 cents per mile for business use (up 1.5 cents from 2023.)
21 cents per mile for medical or moving purposes for qualified active-duty members of the Armed Forces (a decrease of 1 cent from 2023.)
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.
These rates apply to electric and hybrid-electric automobiles as well as gasoline and diesel-powered vehicles.
New in 2023, the Inflation Reduction Act reinstated the Hazardous Substance Superfund financing rate for crude oil received at U.S. refineries, and petroleum products that entered the U.S. for consumption, use, or warehousing. In 2024, this financing rate is being adjusted for inflation. Crude oil or petroleum products entered after December 31, 2016, will now have a tax rate of $0.26 cents per barrel.
Individual Brackets and Rates
Tax Rate
For Single Individuals
For Married Filing Joint & Surviving Spouse
For Married Filing Separately
For Heads of Household
10%
$0 – $11,600
$0 – $23,200
$0 – $11,600
$0 – $16,550
12%
$11,601 – $47,150
$23,201 – $94,300
$11,601 – $47,150
$16,551 – $63,100
22%
$47,151 – $100,525
$94,301 – $201,050
$47,151 – $100,525
$63,101 – $100,500
24%
$100,526 – $191,950
$201,051 – $383,900
$100,526 – $191,950
$100,501 – $191,950
32%
$191,951 – $243,725
$383,901 – $487,450
$191,951 – $243,725
$191,951 – $243,700
35%
$243,726 – $609,350
$487,451 – $731,200
$243,726 – $609,350
$243,701 – $609,350
37%
Over $609,350
Over $731,200
Over $609,350
Over $609,350
Standard Deduction Amounts
For Single Individuals
For Married Filing Joint & Surviving Spouse
For Married Filing Separately
For Heads of Household
$14,600
$29,200
$14,600
$21,900
AMT Exemption Amounts
For Single Individuals
For Married Filing Joint & Surviving Spouse
For Married Filing Separately
For Heads of Household
$85,700
$133,300
$66,650
$85,700
Earned Income Tax Credit
The Earned Income Tax Credit amount for tax year 2024 is $7,830 for qualifying taxpayers who have three or more qualifying children, which is a $400 increase from 2023 ($7,430 in 2023).
Qualified Transportation Fringe Benefit & Qualified Parking Monthly Limitation
In 2024, the monthly limitations for the qualified transportation fringe benefit and for qualified parking increases to $315, which is an increase of $15 from 2023.
Contributions to Health Flexible Spending Arrangements & Cafeteria Plan Carryover Maximum
The limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200 in 2024. For any cafeteria plans that allow carryovers of unused amounts, the maximum carryover increases to $640.
Medical Savings Account
Self-Only Coverage
Family Coverage
Annual Deductible
Not less than $2,800, but no more than $4,150
Not less than $5,550, but no more than $8,350
Maximum Out-of-Pocket Expense
$5,550
$10,200
Foreign Earned Income Exclusion
The Foreign Earned Income Exclusion increases to $126,500 in 2024, which is a $6,500 increase from 2023.
Estate Basic Exclusion Amount
Estates of decedents who pass away during the 2024 tax year will have a basic exclusion amount of $13,610,000. In 2023, the basic exclusion amount was $12,920,000.
Annual Exclusions for Gifts
In 2024, the annual exclusion for gifts increases to $18,000, a $1,000 increase from 2023.
Adoption Tax Credit
The maximum allowable credit for adoptions in 2024 is the amount of qualified adoption expenses up to $16,810, which is a $860 increase from 2023.
Standard Mileage Rates
2024
2023
Business use
67 cents per mile
65.5 cents per mile
Medical or moving purposes for qualified active-duty members of the Armed Forces
21 cents per mile
22 cents per mile
Charitable
14 cents per mile
14 cents per mile
Final Thoughts
Though these inflation adjustments are made every year, it is encouraging that the adjustments aren’t as steep as they were in 2023. For example, from 2022 to 2023, the standard deduction for a single individual increased by $900. Whereas, from 2023 to 2024, the deduction only increased by $750. As the annual adjustments are based on the Consumer Price Index for All Urban Consumers (CPI-U), this could possibly be an indicator that the worst of the inflation is behind us.
If you have any questions, please do not hesitate to contact your Herbein representative.
Article contributed by Courtney Richey.