What’s New – 2025 Tax Changes (Tax Year 2024)

F1Tax — Thu, 06 Feb 2025 19:55:30 +0000

Tatyana Bunich CEP.RFC. | Contact us: 410-908-9293 (MD) | 954-892-6020 (FL)

Tax Day in 2025

Updated: February 15, 2025

The deadline for submitting your taxes for Tax Year 2024 is Tuesday, April 15, 2025. The deadline for submitting your taxes for Tax Year 2023 was Monday, April 15, 2024. For certain scenarios, we may consider an extension to file, but there are payment requirements that matter for the deadline. Call the office or send a message about your return if you have any questions.

Don’t wait — be sure we have all your paperwork so we can maximize your return. We have a convenient and secure client portal for documents. You may choose to do all of your tax preparation and planning with us remotely this year by phone, Zoom and with our secure portal for documents and payments. Or, visit us in person!

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Changes for Tax Year 2024

We’ve gathered a few notable tax changes below for you to consider. Additionally, you can visit the IRS’s page regarding the tax changes for 2024.

Inflation Adjustment

The IRS has adjusted marginal tax brackets and the standard deduction for 2024 in response to inflation. Because of this, you might see an increase in your paychecks, depending on your withholding. Another change includes increases to the allowed contribution amounts for tax-advantaged retirement savings accounts.

Income Tax Brackets Change

With new tax brackets in 2024, some taxpayers may find that their tax bill is lower than expected. Here’s a look at the tax brackets for 2024:

Tax Rate	Single Taxpayers	Married, Filing Jointly
37%	Incomes greater than $609,350	Incomes greater than $731,200
35%	Incomes greater than $243,725	Incomes greater than $487,450
32%	Incomes greater than $191,950	Incomes greater than $383,900
24%	Incomes greater than $100,525	Incomes greater than $201,050
22%	Incomes greater than $47,150	Incomes greater than $94,300
12%	Incomes greater than $11,600	Incomes greater than $23,200
10%	Incomes of $11,600 or less	Incomes of $23,200 or less

Standard Deduction Increase

The standard deductions provided by the IRS are popular for their simplicity. Standard deductions are set amounts by which taxpayers can use to lower their taxable income based on their filing status.

Here’s a table that breaks down standard deduction changes between 2023 and 2024:

Filing status	2023 Standard Deductions	2024 Standard Deductions
Single	$13,850.00	$14,600.00
Married, filing separately	$13,850.00	$14,600.00
Married, filing jointly	$27,700.00	$29,200.00
Head of household	$20,800.00	$21,900.00

Capital Gains Tax Thresholds Change

For the 2024 tax year, individual tax filers will not have to pay any capital gains tax if their total taxable income is $47,025 or less. The capital gains tax rate jumps to 15% if your income is $47,026 to $518,900. If your income is higher than that, you’ll pay 20% in capital gains.

Earned Income Tax Credit Rises

This is a refundable tax credit designed for qualifying earners. It may or may not apply to your scenario. Workers who earn a low to moderate income may be able to reduce their tax liability through the earned income tax credit.

Here are the earned income tax credit requirements for 2024:

Dependents	Maximum possible credit	Income limit for single, head of household or widowed filers	Income limit for married filing jointly filers
0	$632	$18,591	$25,511
1	$4,213	$49,084	$56,004
2	$6,960	$55,768	$62,688
3 or more	$7,830	$59,899	$66,819

There are other rules that might qualify or disqualify you from receiving the earned income tax credit. If you’re not certain if you qualify for the credit, please contact us.

Gift Limit Goes Up

For tax year 2024, you can now give gifts up to $18,000 per person without having to filing a gift tax return. This is an annual limit to be able to exclude certain gifts. Other rules may apply, depending on the gift.

If you are planning to give gifts and want to plan in advance, please contact us.

Other Changes That May Apply to You

The IRS has made a variety of other changes that may affect your tax liability for tax year 2024.

Adoption Credit — increases to a max of $16,810 for tax year 2024. This applies if you have adoption expenses that qualify.

Estate Tax Exclusion — estates valued at $13.6 million or below will not be subject to estate tax in 2024. In 2023, that threshold value was $12.92 million.

FSA Contributions — for tax year 2024, you can contribute to a health plan’s Flexible Spending Account (FSA) to a max of $3,200. If your plan allows, you can carry over a max of $640 to the next tax year.

Changes to the Kiddie Tax — for tax year 2024, a child wage earner under age 19, the first $1,300 of any unearned income is tax free. The next $1,300 is taxed at the child’s rate. Any unearned income above $2,600 is taxed at the parents’ tax rate.

Health Savings Account Deductible Increases — for tax year 2024, o qualify for a health savings account (HSA), participants’ insurance plans must have an annual deductible between $2,800 and $4,150 for individuals, with a maximum out-of-pocket expense amount of $5,550. For family coverage, the annual deductible must be between $5,550 and $8,350, with an out-of-pocket expense limit of $10,200. If you participate in an HSA plan, you can contribute more to your plan this year: up to $4,150 for individuals and up to $8,300 for families.

Increased Foreign Earned Income Exclusion — If you earn income in a foreign country or from an employer in a foreign country, you may benefit from the foreign earned income exclusion, which increased to $126,500 in 2024.

Retirement Plan Contribution Changes
— In 2024, taxpayers can increase their contributions to tax-advantaged retirement savings plans. The contribution limit for employees who contribute to 401(k) and 403(b) plans increases to $23,000 annually, up from $22,500. Employees aged 50 and over can contribute an additional $7,500, for a total of $30,500.

The IRA contribution limit for 2024 is $7,000 for workers below the age of 50 and $8,000 for those over 50. This is an increase from 2023, when the limit was $6,500 and $7,500 for people over 50.

We Are Here to Help

Please keep in mind that the rules for these options and changes can be more complicated, depending on your tax scenario. Have a question? Reach out anytime. As always, we look forward to helping you with your tax returns and helping you to plan your future.

– The Financial 1 Team

This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice as individual situations will vary. For specific advice about your situation, please consult with a lawyer or financial professional. Past performance is no guarantee of future results. The views stated in this letter are not necessarily the opinion of Tatyana Bunich (CEP) (RFC) or Financial 1 and should not be construed, directly or indirectly, as an offer to buy or sell any securities mentioned herein. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Please note that statements made in this article may be subject to change depending on any revisions to the tax code or any additional changes in government policy. Please note that individual situations can vary. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount is subject to its own five-year holding period. Investors should consult a tax advisor before deciding to do a conversion.

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