The IRS issued a press release outlining the income tax brackets and adjustments for the upcoming 2024 tax year. These changes will impact income tax returns filed in 2025, and include modifications to standard deductions, tax rates, exemptions, and various other limits and thresholds.

Starting with the standard deductions, married couples filing jointly can expect an increase of $1,500, bringing their deduction to $29,200 for tax year 2024. Single taxpayers and married individuals filing separately will see a $750 rise in their standard deduction, making it $14,600. Heads of households will also witness an increase of $1,100, with their standard deduction set at $21,900.

The top tax rate for individual single taxpayers earning more than $609,350 ($731,200 for married couples filing jointly) remains at 37% for the 2024 tax year. At the lower end of the spectrum, individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly) will be subject to a 10% tax rate.

The Alternative Minimum Tax (AMT) exemption amount for 2024 has been set at $85,700, with the phase-out beginning at $609,350 ($133,300 for married couples filing jointly, with the phase-out beginning at $1,218,700). These figures represent an increase from the 2023 amounts of $81,300 and $578,150 respectively.

For taxpayers qualifying for the Earned Income Tax Credit (EITC) with three or more qualifying children, the maximum amount for the 2024 tax year will be $7,830, an increase from $7,430 in 2023. The revenue procedure provides a detailed table to determine the maximum EITC amount based on other categories, income thresholds, and phase-outs.

In terms of fringe benefits, the monthly limitation for the qualified transportation fringe benefit and qualified parking for 2024 has been raised to $315, marking a $15 increase from the 2023 limit.

Contributions to health flexible spending arrangements will see an increased dollar limitation for employee salary reductions in 2024, with the new limit set at $3,200. For cafeteria plans that allow carryover of unused amounts, the maximum carryover amount will be $640, a $30 increase from 2023.

Medical Savings Account participants with self-only coverage must have an annual deductible not less than $2,800, and not more than $4,150 for the 2024 tax year. The maximum out-of-pocket expense amount for self-only coverage will be $5,550. For family coverage, the annual deductible will range from $5,550 to $8,350, and the out-of-pocket expense limit will be $10,200.

Other adjustments include an increase in the foreign earned income exclusion to $126,500 for 2024 from $120,000 in 2023, a basic exclusion amount of $13,610,000 for estates of decedents who die in 2024, an increase in the annual exclusion for gifts to $18,000 for calendar year 2024, and a maximum credit for adoptions of up to $16,810 for tax year 2024.

These updates provide individuals and entities with essential information to properly prepare for the upcoming tax year. For detailed information on all the changes and further updates, taxpayers are encouraged to consult the IRS website.

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