Written by: Wing Yee Tsoi and Nick Koeppel
The IRS issued Revenue Procedure 2023-34, setting out inflation adjustments for the 2024 tax year. Before executing any tax planning in 2024, please consult your Wolf engagement team directly.
The important highlights of Rev. Proc. 2023-34 are summarized below:
Gift & Estate Tax
The gift tax annual exclusion will increase again in 2024 to $18,000 per donee.
The lifetime gift and estate tax exemption will increase to $13,610,000 and the GST exemption will also be adjusted to $13,610,000 in 2024.
The annual amount that can be gifted to a non-U.S. citizen spouse in 2024 will increase to $185,000. All gifts to U.S. spouses will continue to qualify for the unlimited marital deduction.
Income Tax
Marginal Rates, Capital Gains Rates, and Alternative Minimum Tax:
For tax year 2024, the top tax rate remains at 37% – a breakdown by rate bracket is below:
| Tax Rate | Single | Married Filing Jointly | Head of Household | Married Filing Separately | Estates & Trusts |
| 10% | Up to $11,600
|
Up to $23,200 | Up to $16,550 | Up to $11,600 | Up to $3,100 |
| 12% | $11,600 -$47,150
|
$23,200 -$94,300 | $16,550 -$63,100 | $11,600 -$47,150 |
N/A |
| 22% | $47,150 -$100,525
|
$94,300 -$201,050 | $63,100 -$100,500 | $47,150 -$100,525 |
N/A |
| 24% | $100,525 -$191,950
|
$201,050 -$383,900 | $100,500 -$191,950 | $100,525 -$191,950 | $3,100 – $11,150 |
| 32% | $191,950 -$243,725
|
$383,900 -$487,450 | $191,950 -$243,700 | $191,950 -$243,725 |
N/A |
| 35% | $243,725 -$609,350
|
$487,450 -$731,200 | $243,700 -$609,350 | $243,725 -$365,600 | $$11,150 -$15,200 |
| 37% | Over $609,350
|
Over $731,200 | Over $609,350 | Over $365,600 | Over
$15,200 |
The income thresholds for long-term capital gains rates have been adjusted for tax year 2024 as follows:
| Tax Rate | Single | Married Filing Jointly | Head of Household | Married Filing Separately | Estates & Trusts |
| 0% | Up to $47,025
|
Up to $94,050 | Up to $63,000 | Up to $47,025 | Up to $3,150 |
| 15% | $47,025 -$518,900
|
$94,050 -$583,750 | $63,000 -$551,350 | $47,025 -$291,850 | $3,150 -$15,450 |
| 20% | Over $518,900
|
Over $583,750 | Over $551,350 | Over $291,850 | Over
$15,450 |
The exemption amounts for Alternative Minimum Tax for tax year 2024 are as follows:
| Filing Status | AMT Exemption | Phaseout
Threshold |
Complete Phaseout |
| Single | $85,700 | $609,350 | $952,150 |
| Married Filing Jointly | $133,300 | $1,218,700 | $1,751,900 |
| Married Filing Separately | $66,650 | $609,350 | $875,950 |
| Estates & Trusts | $29,900 | $99,700 | $219,300 |
Standard Deduction and Personal Exemptions
The standard deduction has been increased for tax year 2024 as follows:
| Filing Status | 2024 |
| Single | $14,600 |
| Married Filing Jointly | $29,200 |
| Married Filing Separately | $14,600 |
| Head of Household | $21,900 |
The personal exemption for tax year 2024 continues to remain at $0, as this was eliminated as part of the Tax Cuts and Jobs Act.
IRAs and ROTH IRAs
The limit on annual contributions to an IRA has increased to $7,000 in 2024.
The IRA catch-up contribution limit for individuals aged 50 and over and remains at $1,000 as it is not subject to an annual cost of living adjustment.
The income limits for ROTH IRA contributions have been adjusted as follows:
| Filing Status | 2024 |
| Single & Head of Household | $146,000 (phase out beings) to $161,000 |
| Married Filing Jointly | $230,000 (phase out begins) to $240,000 |
Other Changes of Note
- Qualified Business Income thresholds have been adjusted as follows:
| Filing Status | 2024 |
| Married Filing Jointly | $383,900 |
| Single + All Other Returns | $191,500 |
- The Foreign Earned Income Exclusion is $126,500, which is an increase from $120,000 from tax year 2023.
- The Lifetime Learning Credit has not been adjusted for inflation since tax years beginning after December 31, 2020. The credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 for single returns, or $160,000 for married filing joint returns.
- The deduction for interest on education loans begins to phase out in 2024 when modified AGI exceeds $80,000 for single returns and $165,000 for joint filers, The deduction is completely phased out when modified AGI exceeds $95,000 for single returns and $195,000 for joint returns. The maximum deduction remains capped at $2,500.
- The maximum credit allowed for adoptions in 2024 is up to $16,810.
- For covered expatriates, the statutory exclusion amount has been increased to $866,000 in 2024.
If you need any assistance with your tax planning, reach out to our experts today!
